Accounting Principles and Ethics Articles

Running Head : ACCOUNTING

Accounting Principles and Ethics

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Accounting Principles and Ethics

Financial management is the process of selection , financing , and stewardship of the assets of any organization . Assets are the things (tangible or intangible ) that organizations own or , under certain circumstances , lease . There are many criteria for legal fiat . In financial management , however , one is concerned with selecting assets according to financial criteria : what assets best serve the financial goals of the organization ? Assets , to be acquired , must be paid

for or financed . In financial management , one must decide what means of financing is least costly and best balances risk and expected return for the organization as a whole . Once finance and acquired , assets must be cared for . They must be maintained , replaced , abandoned , and in the case of financial assets , their returns reinvested . All of these are the problems of financial management (McLean , 2003

Even the smallest health care organizations have professionals (accountants , analysts , bookkeepers , treasurers , planners ) who are specialists in financial management . Broadly conceived , financial management is not a task for specialized managers , but is a special approach to what all managers do (McLean , 2003 . In financial management , financial specialists and non-specialists prepare financial statements . Financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP ) and they are primarily oriented toward historical cost information (Finkler and Ward , 1999 GAAP 's are used by accountants and organizations as guiding framework to formulate financial statements . In the past , this accounting principle is developed from best industry practice . However , now , GAAP 's are promulgated by authoritative bodies such as the Financial Accounting Standards Boards (FASB . The FASB is an independent body that formulates the new accounting rules that are to be adhered to the accounting professions and practicing health care accountants . The Financial Accounting Standards Board recently published an exposure draft , The Hierarchy of Generally Accepted Accounting Principles , in connection with its efforts to improve the quality of financial accounting standards and the standard-setting process (Healthcare Financial Management , 2005

Generally Accepted Accounting Principles are not black and white rules that define what should be done in every conceivable situation but rather guideline sets or frameworks to determine what is the proper treatment regarding the transactions of a health care organization . In fact , GAAP 's usually provide different options medical practitioners can use and still conform . For example , GAAP 's allow a number of different ways for health care organizations to properly depreciate assets . The same is true for inventory valuations , for example , last in , first out (LIFO ) or first in , first out (FIFO ) and so on . The purpose of these alternatives is to give health care organizations the opportunity to choose the reporting option that best reflects the economic reality of the underlying transactions (Stahl , 2004

In health care organizations , particularly in nursing , several moral choices are faced . Morals , as well as ethics , refer to social custom regarding the rights and wrongs , in theory and in practice , of human behavior (Thompson...