Generally accepted accounting principles are rules expected to be overlooked by all accounting professionals at all accounting stages (Maghaun, 2011). These rules are similar across states comprising standard guidelines followed during maintenance on an entity's financial picture. Consideration of these principles ensures that the published reports; audit and expense reports, financial statements and other official accounting statements are accurate, and free from manipulation.
Accounting Standards
Financial reporting practices and ethical standards in health care finance constitute the foundation of every successful organization. Healthcare organizations and other industries in the general market adopt Generally Accepted Accounting Principles (GAAP). The main objective behind this is to boost the organization's value by maintaining the integrity within and to leverage public trust. This paper summarizes the elements of financial management, GAAP and ethical standards in healthcare finance.
Elements of Financial Management
Financial management as a holistic process constitutes of four recognized elements: controlling, planning, organizing and directing, and decision-making (Baker & Baker, 2011). The formulation of the four elements was mainly through consideration of the purpose behind each task. This paper discusses the four elements in detail.
Planning is a crucial division of financial managements. Every organization sets objectives to guide their performance, meeting such objectives require the company's financial manager to take stepwise procedures. The manager of financial operations within the organization pinpoints the procedures that must be followed in pursuit of achieving such targets. Planning plays, the capital role in identifying the organization's business objectives and the steps needed to accomplish the objectives.
Organizations formulate plans and objectives, which regularly need management. The element of controlling drives the financial manager to ensure that each plan runs as stipulated by the organization, for the organization's operations. An example of control method is the comparison of current and previous reports. This process highlights the areas that the company or organization may need upgrade due to ineffectiveness. The main purpose of controlling is to ensure the implementation of plans to the latter (Baker and Baker 2011).
The division of organizing and directing assists the financial manager in making critical decisions on the utilization of organization's resources to the most effective manner while carrying out the established plans. Directing entails the manager ensuring that the organization's results run efficiently. The purpose of this element of financial management is to ensure regular supervision and controlled utilization of available resources.
The element of decision-making is a daily process in every organization's managerial staff in their practices. Financial managers often make choices from several alternatives given to them. Decision-making binds to the consequent elements of planning, organizing and control. This depends on information with its core tasks constituting analysis and evaluation. The analyzed and evaluated information is mainly of a financial nature. Decision-making holds the purpose of making informed choices.
Generally Accepted Accounting Principles
Health care organizations have over the years adopted the general code of ethics. The organization's management employs these ethic codes in the interpretation of the organization's financial transactions. Such transactions involve the preparation of financial reports and statements. The accepted principles include consistency, relevance, reliability, and comparability. The concept of consistency stipulates that financial information be collected and reported in the same manner recurrently. Conceptual relevance requires that information contains a purpose and should provide credible support to the financial statements and reports. Reliability means that the reported information truly reflects the organization's statement of account. Comparability: the reported information is comparable with those from other organizations within the industry (Bradford, 2007).
Financial Ethical Standards
Confidentiality: accounting professionals are privy to financial information that is sensitive in nature. Such information could be utilized for purposes like financial gain, countering other entities'. The accepted accounting ethical standards restrict such confidential information only to the authorized parties. Certified Public Accountants and other accounting professionals should not disseminate or discuss information that might compromise an organization's position in the market economy. Integrity provided by the accountants should benefit the organizations to which they entrust to represent.
Disclosure: financial accounting professionals perform their duties according to the accepted accounting principles. Accounting principles formulate accounting standards that work to prevent ethical concerns. There might be incidences of conflict between what an organization wishes to disclose and what the accounting professional thinks should be disclosed. Any prerequisite disclosures should be done properly to avoid ethical dilemmas by being overly complete to gain and maintain public trust at all times.
Professionalism: Certified Public Accountants and other accounting professionals carry out their job operations professionally prior to their expertise. This aspect entails following to the latter requirements of the Generally Accepted Accounting Principles (GAAP), updating oneself with counting education and sourcing assistance where needed on order to provide efficient services to clients. The accounting professionalism ethics require that an accountant must never engage in corrupt practices. Clients facilitate such practices and could lead to lose of public trust or even damage to one's entrusted accounting firm (Camiciottoli 2011).
Integrity and Objectivity: Financial ethical standards stipulate that accounting professionals must never falsify financial records, facilitate falsifying of records by others or approve false statements. Equally, professionals should at all times avoid incidences leading to conflict of interest that would rather lead to the temptation to defraud or falsify information. Such interests comprise not only personal, direct interests but also those of parties like family or organizations to which the accountant binds. Corporate fraud could virtually be eliminated by strict adherence to the defined ethical standards.
Ethical Standards of Conduct and Financial Reporting Practices
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