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Unique Aspects of Health Services & Financial Management
Unique Aspects of Health Services & Financial Management
Accounting functions are essential in healthcare organizations. The main accounting functions are financial accounting and managerial accounting. Financial accounting is the method of recording, summarizing, and reporting the financial transaction of an organization. Financial accounting aims to offer financial information to external users like creditors, government agencies, and investors (Habbash & Haddad, 2019). Besides financial accounting, another accounting function is managerial accounting. Managerial accounting recognizes, gages, examines, interprets, and communicates financial material to support internal planning, controls, and decision-making.
Financial and managerial have vital insight into operational oversight since they offer managers vital information on an organization’s performance. For instance, financial accounting has a significant role in financial reporting. Through financial accounting, managers access vital financial statements like cash flow, balance sheets, and income statements that summarize an organization’s position and financial performance (Habbash & Haddad, 2019). On the other hand, managerial accounting assists managers in controlling the organization’s operations by offering information about performance metrics and budgets (Ebaid, 2021). This information assists managers in settling on informed decisions on performance evaluation and resource allocation.
The unique features of accounting functions have a vital role in the financial management of numerous organizations. One of the features of the financial accounting function is standardization and regulation. For instance, financial accounting assists managers in accessing reliable and consistent financial information, allowing them to make informed decisions based on standardized and accurate financial information (Ebaid, 2021). In addition, another feature of financial accounting is internal controls. For example, accounting functions like managerial accounting assist financial managers in maintaining and establishing internal controls to ensure the reliability and accuracy of financial information.
Ebaid, I. E.-S. (2021). Employers’ Perceptions of Generic Employability Skills of Accounting Graduates: Evidence from Saudi Arabia. Journal of Management and Business Education, 4(2), 136–149. https://doi.org/10.35564/jmbe.2021.0008
Habbash, M., & Haddad, L. (2019). The impact of corporate social responsibility on earnings management practices: evidence from Saudi Arabia. Social Responsibility Journal, 16(8), 1–13. https://doi.org/10.1108/srj-09-2018-0232
There are a number of unique factors relating to the health services sector:
Compare the two types of accounting functions.
Describe how the accounting functions affect operational oversight.
How do these unique features affect the financial management of the sector?
Expert Solution Preview
Introduction: Accounting functions play a critical role in healthcare organizations, especially in financial management. This response will compare financial accounting and managerial accounting, describe their impact on operational oversight and explain how their unique features affect the financial management of the health services sector.
1. Compare the two types of accounting functions.
Financial accounting is a system of reporting an organization’s financial information to external users such as investors, government agencies and creditors. It involves recording, summarizing and reporting financial transactions of the organization. On the other hand, managerial accounting is an internal process that involves interpreting, analyzing and communicating financial information to support internal planning, budgeting and decision-making processes. Managerial accounting is focused on providing managers with information that will help them make better decisions.
2. Describe how the accounting functions affect operational oversight.
Both financial and managerial accounting provide critical insights into operational oversight. Financial accounting provides financial statements like balance sheets, income statements and cash flow statements, offering vital information on the financial performance of the organization. Managerial accounting, on the other hand, provides information on performance metrics and budgets, which helps managers monitor and control the operations of the organization. The information provided by these accounting functions helps managers make informed decisions.
3. How do these unique features affect the financial management of the sector?
The unique features of accounting functions have significant impacts on the financial management of the health services sector. Standardization and regulation help ensure that reliable and consistent financial information is available to managers, enabling them to make informed decisions. Internal controls assist financial managers in establishing and maintaining an environment of accuracy and reliability in financial information. This contributes to the effective financial management of healthcare organizations, which in turn supports the overall delivery of quality healthcare services.
In conclusion, accounting functions are essential for the effective financial management of healthcare organizations. Financial and managerial accounting provides managers with critical information for decision making, which promotes operational oversight. The unique features of accounting functions contribute to ensuring reliable and consistent information available to managers and maintaining a culture of accuracy and reliability in financial information. All these aspects contribute to the delivery of quality healthcare services.
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