Financial Management, Reporting Practices, and Ethical Standards in Health Care Finance
Health care managers have many responsibilities, which support their roles in creating and maintaining successful organizations. A key responsibility managers undertake is the ability to manage financials appropriately.
"First and foremost, financial management is a decision science. Whereas accounting provides decision makers with a rational means by which to budget for and measure a business’s financial performance, financial management provides the theory, concepts, and tools necessary to make better decisions” (Gapenski, 2007).
For leaders to manage finances successfully, they employ four key managerial elements. The four elements include: (1) planning, (2) controlling, (3) organizing and directing, and (4) decision making. Through these managerial processes, managers may identify objectives and develop plans to meet objectives. In addition, management may decide the best courses of action to take and the resources needed to execute action plans. Should managers not execute these elements effectively, the organization is likely to miss target goals and struggle financially. Management not only must understand how to employ the elements of financial success but also uphold appropriate practices. The following will detail generally accepted accounting principles and ethical standards involved in health care finance. In addition, the significance of ethical standards of conduct and financial reporting practices will be outlined.
Generally Accepted Accounting Principles
Generally accepted accounting principles (GAAP) are the regularly followed accounting guidelines and standards for financial reporting.
“GAAP specifications include definitions of concepts and principles, as well as industry-specific rules. The purpose of GAAP is to ensure that
Cited: Best-Practice.com. (2013). Generally Accepted Accounting Principles . Retrieved April 15, 2013, from Best-Practice: http://www.best-practice.com/best-practice-in-reporting-accounting/best-practices-in-accounting/generally-accepted-accounting-principles-gaap/ Gallup, B. (n.d.). Accounting Ethics in Healthcare. Retrieved April 15, 2013, from Houston Chronicle: http://smallbusiness.chron.com/accounting-ethics-healthcare-36147.html Gapenski, L. C. (2007). Understanding Healthcare Financial Management. In L. C. Gapenski, Understanding Healthcare Financial Management (Fifth ed., p. 3). Chicago, Illinois: Health Administration Press . Rouse, M. (2010, March). GAAP (generally accepted accounting standards). Retrieved April 14, 2013, from WhatIs: TechTarget: http://whatis.techtarget.com/definition/GAAP-generally-accepted-accounting-standards