Patton-fuller community hospital case study Abstract Finance, understanding how it affects the smallest business to the largest organization, is the origin to financial success in businesses. According to Gitman (2006), finance is the art and science of managing money. Virtually every individual business and large organization, Be the organization for profit or non-profit, depends on the rates at which these entities earn, or raise money, and the rate at which they spend or invest these earned monies.
Understanding these financial processes will enable the financial manager, or even the non-financial managers to more effectively interact with financial personnel, processes, and procedures. Patton-fuller community hospital case study How did the audited and unaudited financial statements differ? The differences between the audited and unaudited sections of the financial statements are strikingly different. According to Patton-Fuller © 2011, it appears the financial officer had severely over-estimated the prospectus in payment remittances, giving the impression that the organization would be doing a lot better than the actuality.
When providing numbers for accounts receivable in 2009 the financial officer estimated the total at (totals shown in the thousands) $59,787, with a net allowance for bad debt for the same time-period at $10,757 while the audited version shows a very different picture. Accounts receivable for 2009 revealed a total $58,787, a one million dollar lower receivable difference. In addition, the net allowance for bad debt is shown at, $11,757, a one million dollar increase. The differences showing the audited amounts appear to show a vast difference.
In addition, reveal a two million dollar deficit, from the unaudited version. This difference could in time cause the falter of the organization. In addition, the statements of revenue and expenses show major differences revealed between the audited and unaudited. These differences reveal a $378 thousand dollar difference in the unaudited and the actual amounts of operating income. This large of a difference in the predicted and the actuality could cause the organization to become over-extended, and over-whelmed in debt. Are the financial ratios for the hospital improving?
What is the effect of revenue sources on the financial reporting at the hospital? Patton Fuller appears, according to the profitability ratios, encountering hardships, after evaluating the return on total assets and operating margins, the organization is declining tremendously, producing income in contrast to its costs. The 2008 and 2009 expense report includes assets from audited and unaudited annual reports. The balance sheet comprehend the T account is equally valuable to examine. There are two sides of the T account report, the left side indicates the debits and right side indicates the credits.
According to the 2009 unaudited balance sheet, a wrong amount of $13,797,000 was entered: after a corrected amount entered of $14, 797,000, the numbers reveal a discrepancy of $1,000,000. The operations income was $6,890,000 and the entry $3,110,000, reveling a discrepancy of $2, 540,000. A negative effect will result in the debit side, as wrong account entries on the balance sheet. The organization will overspend, and the resources allocated according to these improper entries, as mistakes in managerial decisions will occur.
How are the hospital’s revenues and expenses grouped for planning and control? There are five different groups for revenue and expenses. These groups consist of expenses, revenues, non-operating and operating income, and last but not least, net income. The expense section is made up of benefits and salaries, supplies that are needed, all professional and physician fees, depreciation and amortization, utilities, interest, of course the “other” section, and last but not least, provision for doubtful accounts. Patton-Fuller, 2011). The revenues section shows net patient revenue plus other revenue, and these are totaled together. The section of non-operating and operating income is where the total investment income is. The last section of the statement is the net income. The net income consists of the total revenue minus the expenses and losses. This section is used for the planning and controlling of costs. . (Patton-Fuller, 2011). The Patton-Fuller financial statements show differences in the audited vs. the unaudited statements.
It shows how they are improving or not, the effects of revenue in the report, and how it is used to control and planning. It seems the hospital’s revenues are grouped and controlled appropriately. Conclusion There seems to be some inconsistencies in the financial statement itself. As long as the financial reports are reviewed on a regular basis, it should alleviate any problems that may arise, and allow these problems to be fixed. If the mistakes seem to keep happening, then the company may find itself in a lot of financial trouble, which in turn may lead to the demise of the company.
Reviewing cannot be stressed enough. You need to be able to see where your problems are at in order to create a plan to fix them. References Gitman, L. , (2006). Principals of managerial finance, Addison, Wesley, Pearson; Education Publications, p. 4. (2000-2011). Accounting Principles I: T Accounts-Cliff-Notes Retrieved from topic Articled-21081,articled-21009. html http://www. cliffsnotes. com/study_quideT-Accounts Patton-Fuller community hospital resource: Copyright © 2006, 2010, 2011 by Apollo Group, Inc.