Financial Reporting Practices And Ethics Paper Hcs 405
Reporting Practices and Ethics Paper
Mary Kaiser
HCS/405 Health Care Financial Accounting
July 7, 2014
David Albalat
Reporting Practices and Ethics Paper
Introduction
In this paper, we will discuss the financial reporting aspects of accounting and what ethical standards are being met by the health care industry. Our discussion leads us to the four fundaments accounting principles, the generally accepted accounting principles, and the financial ethics of accounting and the code of ethical behavior for managers in the health care setting.
Financial Reporting and Ethical Standards
The National Health Care Anti-Fraud Association (NHCAA) estimates that the financial losses due to health care fraud are in the tens of billions …show more content…
of dollars each year (The National Health Care Anti-Fraud Association, 2012, p. 1). Over the last few decades there has been fraudulent financial reporting because management is misleading there investors and shareholders with unscrupulous financial statements so the company 's stock will skyrocket so they company figures they fill face the consequences later. Why this happens is because an employee or individual who is in a high level position will steal or embezzle assets for the company use or interest. Penalties for violations of accounting ethics laws have increased greatly since the passage of the Sarbanes-Oxley Act of 2002 (Freedman, 2014, p. 1). An example, when a CEO or senior management will charge other expenses to the company, such as taking the family to dinner. This is the misappropriation of assets that has occurred.
The most common types of fraud is billing for services that were not rendered by using the patient information which is obtained through identify a treatment or making claims for a procedure that did not take place. Falsifying a patient’s diagnosis or illness and billing for these unnecessary procedures are not ethically sound. Patients will be billed for services that first of all are expensive in nature, but they are also known as "upcoding." Upcoding is falsely billing at a higher price for treatment that has not actually happened to the patient or individual. Generating and performing unnecessary services for insurance payments are often conducted because sending patients for unnecessary testing and procedures. Another area that we are seeing is called "unbundling." Instead of billing for the whole procedure at the time of service, these bills are sent to the insurance companies as if these procedures were are being billed separately for each procedure. This just means more revenue for the health care organization.
Four Elements of Financial Management
The four fundamental accounting principles ' which management needs to recognize are planning, controlling, organizing and directing and decision making.
Management needs to have a plan or purpose in motion and gather the necessary information which will make the health care organization successful. Controlling is when the healthcare organization is adhering to the plans that are developed by management. Organizing and directing a plan which the health care organization needs to follow and maintain certain steps, resources and stayed focused on the end result, which is success. The proper decision making choices are through education. The financial team is accountable for making sure the appropriate reports are up-to-date, and they are accountable for reporting the funds with principles set forth by the code of ethics and mission statements of the health care organization. Every organization must be willing to release the financial reports which are deemed to be correct. If a health care organization provides incorrect information, this can be immoral and cause financial difficulties to the …show more content…
organization.
Generally Accepted Accounting Principles (GAAP)
The generally accepted accounting principles was put into place by the American Institute of Certified Public Accountants (AICPA) in October, 1999. According to the FASAB “the generally accepted accounting principles serves as guidelines precisely, a group of objectives and verified conventions that were permanently set up over time to standardize how financial statements must be prepared or presented” (FASAB, 2010). These principals prohibit their members from expressing an opinion or stating that the financial statements are “presented fairly” in conformity with the GAAP practices. The FASAB is responsible for identifying the “GAAP hierarchy” for federal reporting entities (FASAB, n.d.). Third party accountants will use these statements to determine how the facility or organization is doing.
Financial Ethical Standards
The area of managerial accounting is the functional part and responsibility for management because the financial information is scrutinized. These owners are trying to allocate the costs of goods sold and services, prepare operational budgets and forecast production output or sales. Ethics is an important part of managerial accounting, and companies may develop a code of ethics or conduct to set the expected ethical behavior for accountants (Vietz, 2014, p. 1). The standards of accounting ethics are competence, confidentiality, integrity and credibility. Competence is using professional expertise in developing the proper accounting knowledge and skills to complete certain aspects of their job. Confidentiality is when accountants do not disclose any pertinent information to anyone other than the supervisor or the client. Integrity will prohibit managers from engaging in unethical conduct. The manager’s credibility refers to the accountant’s ability to communicate the accounting information effectively and objectively with all individuals, such as supervisors, clients and stakeholders. The health care organization will hold the financial manager accountable for any right or wrong reporting of the accounting information provided to outside vendors or shareholders. This could affect the reputation of the health care organization or facility. Health organizations may choose to act unethical in a business environment because these individuals believe that an unethical behavior is not illegal, but this does create a gray area in this organization. These accountants will push the ethical limits when it comes to recording and reporting the financial statements.
Conclusion
In conclusion, our discussion was based on the financial reporting areas of accounting and how the organization views these ethical standards.
Our discussion evolved to the four fundamental accounting principles which the financial manager needs to follow and how to incorporate the generally accepted accounting principles which are provided by the AICPA. The last source discusses the ethical behavior of the financial accounting managers in health care.
References
Author, N. (n.d.) www.fasab.gov. Federal Accounting Standards Advisory Board, Authoritative Source of GAAP. Retrieved from: http://www.fasab.gov/accounting-standards/authoritative-source-of-gaap/#gaap
Author, N. (2012). www.nhcaa.org. Retrieved from: National Health Care Anti-Fraud Association: www.nhcaa.org
Freedman, J. (2014). www.smallbusiness.chron.com. What is an Ethical Issue In Financial Accounting. Retrieved from: http://smallbusiness.chron.com/ethical-issue-financial-accounting-57889.html
Vitez, O. (2014). www.smallbusiness.chron.com. About Ethics in Mangerial Accounting. Retrieved from:
http://smallbusiness.chron.com.com/ethical-issues-financial-accounting
Mary Kaiser
HCS/405 Health Care Financial Accounting
July 7, 2014
David Albalat
Reporting Practices and Ethics Paper
Introduction
In this paper, we will discuss the financial reporting aspects of accounting and what ethical standards are being met by the health care industry. Our discussion leads us to the four fundaments accounting principles, the generally accepted accounting principles, and the financial ethics of accounting and the code of ethical behavior for managers in the health care setting.
Financial Reporting and Ethical Standards
The National Health Care Anti-Fraud Association (NHCAA) estimates that the financial losses due to health care fraud are in the tens of billions …show more content…
of dollars each year (The National Health Care Anti-Fraud Association, 2012, p. 1). Over the last few decades there has been fraudulent financial reporting because management is misleading there investors and shareholders with unscrupulous financial statements so the company 's stock will skyrocket so they company figures they fill face the consequences later. Why this happens is because an employee or individual who is in a high level position will steal or embezzle assets for the company use or interest. Penalties for violations of accounting ethics laws have increased greatly since the passage of the Sarbanes-Oxley Act of 2002 (Freedman, 2014, p. 1). An example, when a CEO or senior management will charge other expenses to the company, such as taking the family to dinner. This is the misappropriation of assets that has occurred.
The most common types of fraud is billing for services that were not rendered by using the patient information which is obtained through identify a treatment or making claims for a procedure that did not take place. Falsifying a patient’s diagnosis or illness and billing for these unnecessary procedures are not ethically sound. Patients will be billed for services that first of all are expensive in nature, but they are also known as "upcoding." Upcoding is falsely billing at a higher price for treatment that has not actually happened to the patient or individual. Generating and performing unnecessary services for insurance payments are often conducted because sending patients for unnecessary testing and procedures. Another area that we are seeing is called "unbundling." Instead of billing for the whole procedure at the time of service, these bills are sent to the insurance companies as if these procedures were are being billed separately for each procedure. This just means more revenue for the health care organization.
Four Elements of Financial Management
The four fundamental accounting principles ' which management needs to recognize are planning, controlling, organizing and directing and decision making.
Management needs to have a plan or purpose in motion and gather the necessary information which will make the health care organization successful. Controlling is when the healthcare organization is adhering to the plans that are developed by management. Organizing and directing a plan which the health care organization needs to follow and maintain certain steps, resources and stayed focused on the end result, which is success. The proper decision making choices are through education. The financial team is accountable for making sure the appropriate reports are up-to-date, and they are accountable for reporting the funds with principles set forth by the code of ethics and mission statements of the health care organization. Every organization must be willing to release the financial reports which are deemed to be correct. If a health care organization provides incorrect information, this can be immoral and cause financial difficulties to the …show more content…
organization.
Generally Accepted Accounting Principles (GAAP)
The generally accepted accounting principles was put into place by the American Institute of Certified Public Accountants (AICPA) in October, 1999. According to the FASAB “the generally accepted accounting principles serves as guidelines precisely, a group of objectives and verified conventions that were permanently set up over time to standardize how financial statements must be prepared or presented” (FASAB, 2010). These principals prohibit their members from expressing an opinion or stating that the financial statements are “presented fairly” in conformity with the GAAP practices. The FASAB is responsible for identifying the “GAAP hierarchy” for federal reporting entities (FASAB, n.d.). Third party accountants will use these statements to determine how the facility or organization is doing.
Financial Ethical Standards
The area of managerial accounting is the functional part and responsibility for management because the financial information is scrutinized. These owners are trying to allocate the costs of goods sold and services, prepare operational budgets and forecast production output or sales. Ethics is an important part of managerial accounting, and companies may develop a code of ethics or conduct to set the expected ethical behavior for accountants (Vietz, 2014, p. 1). The standards of accounting ethics are competence, confidentiality, integrity and credibility. Competence is using professional expertise in developing the proper accounting knowledge and skills to complete certain aspects of their job. Confidentiality is when accountants do not disclose any pertinent information to anyone other than the supervisor or the client. Integrity will prohibit managers from engaging in unethical conduct. The manager’s credibility refers to the accountant’s ability to communicate the accounting information effectively and objectively with all individuals, such as supervisors, clients and stakeholders. The health care organization will hold the financial manager accountable for any right or wrong reporting of the accounting information provided to outside vendors or shareholders. This could affect the reputation of the health care organization or facility. Health organizations may choose to act unethical in a business environment because these individuals believe that an unethical behavior is not illegal, but this does create a gray area in this organization. These accountants will push the ethical limits when it comes to recording and reporting the financial statements.
Conclusion
In conclusion, our discussion was based on the financial reporting areas of accounting and how the organization views these ethical standards.
Our discussion evolved to the four fundamental accounting principles which the financial manager needs to follow and how to incorporate the generally accepted accounting principles which are provided by the AICPA. The last source discusses the ethical behavior of the financial accounting managers in health care.
References
Author, N. (n.d.) www.fasab.gov. Federal Accounting Standards Advisory Board, Authoritative Source of GAAP. Retrieved from: http://www.fasab.gov/accounting-standards/authoritative-source-of-gaap/#gaap
Author, N. (2012). www.nhcaa.org. Retrieved from: National Health Care Anti-Fraud Association: www.nhcaa.org
Freedman, J. (2014). www.smallbusiness.chron.com. What is an Ethical Issue In Financial Accounting. Retrieved from: http://smallbusiness.chron.com/ethical-issue-financial-accounting-57889.html
Vitez, O. (2014). www.smallbusiness.chron.com. About Ethics in Mangerial Accounting. Retrieved from:
http://smallbusiness.chron.com.com/ethical-issues-financial-accounting