By: Harmony Labanowski
Instructor Jay Christensen
April 18, 2011
Four Elements of Financial Accounting
Planning is when the financial manager identifies the steps that must be taken to accomplish the organization’s objectives. The purpose is to identify objectives and then to identify the steps required for accomplishing these objectives.
Controlling is when the financial manager makes sure that each area of the organization is following the plans that have been established. The purpose of controlling is to ensure that plans are being followed.
Organizing is when the financial manager decides how to use the resources of the organization to most effectively carry out the plans that have been established. Directing is when the manager works on a day-to-day basis to keep the results of the organizing running efficiently. The purpose is to ensure effective resource use and provide daily supervision.
Decision making is when the financial manger makes choices among available alternatives. Decision making actually occurs parallel to planning, organizing, and controlling. All types of decision making rely on information, and the primary tasks are analysis and evaluation. The purpose is to make informed choices (Baker and Baker, 2001).
Summary of generally accepted accounting principles and general financial ethical standards
Most healthcare organizations operate on the accrual accounting basis. With this type of accounting; revenue is recorded when it is earned-not when payment is received; and expenses are recorded when they are incurred-not when they are paid.
Ethical decision making is required when the healthcare executive must balance the needs and interests of the individual, the organization and society. Those involved in the decision making process must consider ethical principles such as justice, autonomy, beneficence and fairness, as well as professional ethical standards and codes.
References: American College of Healthcare Executives, “Ethical Decision Making for Healthcare Executives.” August, 1993, Revised on Nov. 2007. Retrieved from www.ache.org/policy/decision on April 18, 2011. Larry J. Tyler, Healthcare Financial Management, “Maintaining the strength of your convictions: given the recent rash of ethical transgressions within and beyond health care, discussions about ethical standards, conflicts of interest, and moral decision making are occurring nationwide. This is a good thing!” May 2004. Retrieved on April 18, 2011 from www.bnet.com. Joseph R. Batte, Kristall Associates, Inc. (2001). “Healthcare compliance specialist: Penalties for Health Care Fraud and Abuse.” Retrieved from www.health-care-compliance.com on April 18, 2011. Baker, J.J and Baker R.W. (2001). Health care finance: Basic tools for nonfinancial managers (3rd Ed.). Jones and Bartlett