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This paper delves on outlining and analyzing the how to manage the financial resources in the health and the social welfare. Principle of costing is one of the generally accepted principles or cannons of accounting. The principle has five basic fundamentals that should be adopted in any costing exercise. The five basic fundamental principles are well highlighted below (Armstrong 2004, Pg 23).
A stakeholder is one who has interest and can assist you in anything that you are undertaking. Under this principle, identify all stakeholders, concentrate on the ones that would want to help you or bar you from achieving your targeted goal. Be very clear on the demands you want from each stakeholder, connect the interest of the stakeholders with your goals and then prioritize. Get enough agreement and consensus to secure your goal (Rieple 2007, pg 125).
The principle of consistency
This principle needs the following of a similar procedure and in case of any change hen an explanation to the effect is therefore ideal. One of the duties of an auditor is to make sure the consistency principle is being followed because, without this, any change might make correct interpretation of the financial data impossible (Haldane 2011, pg 134).
Principle of Transparency
The Principle of Transparency refers to the openness and honesty visibility in all transactions, ensuring that all information on procurement procedures, opportunities and processes are well outline and publicized (Higgins 2004, pg 118).
The materiality concept
An item is considered material if it’s omission or misstatement will affect the decision making process of the users. Materiality depends on the nature and size of the item. Only items material in amount or in their nature will affect the true and fair view given by a set of accounts. An error that is too trivial to affect anyone’s understanding of the accounts is referred to as immaterial. In preparing accounts it is important to assess what is material and what is not, so that time and money are not wasted in the pursuit of excessive detail. Determining whether or not an item is material is a very subjective exercise (Rieple 2007, pg 105).
An accountant must show objectivity in his work. This means he should try to strip his answers of any personal opinion or prejudice and should be as brief and detailed as the situation warrants. The result of this should be that any number of accountants will give the same answer independently of each other. Objectivity means that accountants must be free from bias. They must adopt a neutral stance when analyzing accounting data. In practice objectivity is difficult. Two accountants faced with the same accounting data may come to different conclusions as to the correct treatment. It was to combat subjectivity that accounting standards were developed (Armstrong 2004, pg 46).
In many costing exercises, it has always been noted that the cost of payment for any event or service has a direct or a very close relationship with its cause. The nature of the cause therefore is used in the appropriate allocation and budgeting. This is almost similar to the principle of the proximate cause in the cannons of insurance that states it clearly that for one to be compensated; there must be a close and direct relationship between the property insured and the risk that has occurred. In insurance the compensation cost is usually based on the amount of loss and the premiums paid are also based on the nature of the property to be insured (Britton 2007, pg 34).
Abnormal costs are charged in costing:
Abnormal costs are costs that are met and incurred due to losses that are cause and triggered by fire, strikes or protests, theft and accidents. These costs are never articulated to production because they share nothing in common with production. They only destroy cost figures and confuse the management thereby misdirecting them the reasons of cost control (Rieple 2007, pg 65).
Data accuracy principle
A cost is always charged after it has incurred. Any cost that has already been incurred is referred to as no cost and can therefore not be charged at a cost center (Damodaran 2010, pg 54).
It is in many cases and the trend that costs of any period of time are met at that particular period of time and not carried forward to another period that it was never incurred. This is so because carrying forward of costs gives an overload to the costs at that particular period of time. This can lead to misunderstanding and even trigger disputes in clearing the costs. It is only advertisement costs that are an exception here; this is so because advertisement is needed at all periods of time in the business lifespan so long as the business is in operation. It can therefore be charged at the era of importance (Grier 2007, pg 67).
Keeping of accounts for cost is also based on Double entry principle:
The rule of double entry is always employed in the accounting records. This principle requires that entries should be both debited as well as credited in the accounts that are affected. The cost ledger accounts and other budgetary accounts use this principle to evade the various errors that do be as a result of the wrong entries made in the recording time. To properly determine cost, a large use of the costing sheets as well as the cost statements are required. This is for the purpose of cost control and for the various management purposes (Salvi 2010, pg 42).
Information needed to manage financial resources for effective financial management in the business.
In financial resource management, the management must have a well-trained accountant who keeps records of the various financial transactions in an institution. The transactions could involve the various cash flows. The cash flow could be inflow or outflow. Cash inflow are as a result of the operating activities of the institution, incomes from the business and other revenues that are subsidiary, income that are not the main head income in an institution. The cash outflows are those that are paid out by the business. They are the expenses that a business incurs while in operation. Accounting knowledge is therefore needed by the finance controller of the business institution for proper management without any shortfall. For an effective and also financial management, there is need for quality and accurate information on financial matters about the business (Haldane 2011, pg 76).
The regulatory requirements for managing financial resources
Regulatory compliance assists in the buildup of the training programs that hospital and family home care centers. Health care or social care institution regulations are the rules that make access to the access to the facility easier. BUPA facility is easier to locate because of its established website and portal that makes it globally known. Other regulatory requirements that the business conducts is the training requirement for the health care facility. Compliance with the laws of the state can help in the creation of a conducive atmosphere for the personnel, saving lives of the people, save money as it reduces unnecessary fines and levies that are charged, build patient’s trust on the business and the staff, improve image, reduce personnel stress, and position a facility for a state of continuous alarm and readiness to act when the need arises (Rieple 2007, pg 21).
BUPA business complies so much with the regulations of the industry and where necessary makes adjustments to keep their good reputation flying higher. The United Kingdom Services Authority is the financial regulator of BUPA. The business is also on the move of establishing and making a strong relationship with the regulators in the surrounding environment and the home country. The Board of the BUPA business also requires that the staff should undergo regular training so that the quality of the services delivered , the detriment of the customers are averted, the business reputation is maintained and even to prevent the financial consequences (Haldane 2011, pg 46).
The diverse sources of income that may be encountered in health and social care
A health care facility can have diverse sources of income for the operations to run as they are planned b the management. Like for the case of BUPA, the business has continued in its dealings with the government and this has fostered a long term development strategy for the business. The local authorities in the area also provided some funds to the business for its various operations to continue running (Rieple 2007,pg 89).
The factors that may influence the availability of financial resources in BUPA
The changes in the in the financial clinical and health and safety standards in the BUPA markets can raise the cost of operation, and thereby reducing the revenues and rates on returns (Haldane 2011, pg 64).
How financial shortfalls can be managed
In any health care facility, there can be arising financial shortages. Financial shortfalls are cases that arise when the amount of money that is available is below the amount money that should be spent. It can as well occur when the amounts payable are more than the amounts receivable. The shortages can be met following different strategies. In financial management, funds are solicited from various sources to aid in the continued operation of any business. The money can be sourced from the financial institutions in the state, the ploughed.............
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