Managing Financial Resources in Health and Social Care for Care Tech Holdings Plc.
The objective of Care Tech PLC homes is to provide quality social care services. Our programs through the available services offer support to both adults and children. Some of the services provision of the Care Tech PLC includes,
Health visitors, midwives, and district nurses
Personal assistants or another support staff for handling daily tasks
Doctors surgeries such as dental surgery
Schools and mobile clinics
Nursing and residential care homes
The interest of care tech PLC is to increase the quality of their social care services and expansion in the market share holding. The achievement of its objective is through the social care expertise, nationwide locations, ongoing growth, increased shareholder value, and having an excellent shareholder value. The growth of Care Tech PLC home has been a success through different criteria expeditions in its financial management. The Care Tech PLC has continued to experience growth over the years. The board is confident that through the new opportunities that are now present in the social care environment as an organization has the expertise to tap in on those opportunities.
The comprehension of this task involves knowing business control and costing procedures. It includes income, costs, expenditure, cost benefit analysis, cost control, budget, capital, cost control, forecasting, profit making, breakeven, and basic software for the examination of financial data within the organization.
1.1 Explaining the principles of costing and business control systems
Principles of Costing
Cost is always related to its cause
It is evident that the relationship of cost is directly proportional to its cause. The collection and analysis of figures of cost are usually in accordance to the nature of the allocation and based on the cause relationships.
Abnormal cost is charged in costing
The incurring cost that caters for the loss by either fire or riot or theft is termed as an abnormal cost. This cost cannot reflect on the production cost as the damage has nothing to do with production activities. It will only lead to discrepancies in cost figures thus misleading the management team on the objective of cost control. The normal cost that relates to either production or service rendered is charged at the cost centers and not to the abnormal cost charges.
Cost is charged after it is incurred
The consideration of an incurred cost is that there is no cost hence charges cannot be catered for at the cost center. For example, an occurrence is when the normal loss is borne through that unit where the loss has been incurred. The imposition of such a loss cannot be on the units that are yet to pass through production.
Past costs are not taken into contemplation to future costs
The recommended financial procedure is that the cost incurred during a particular period is tackled in that particular same period. If the cost reflects past periods then the postponement to the future then that is financially wrong. If past costs have future consideration, then meeting that future cost will be problematic, as the burden of the past costs will weigh greatly on the management. The only exception to this principle is advertising, which most organizations will treat as deferred revenue expense thus paying off the incurring charges is in the benefits period.
The double entry principle stores the cost ledgers and any other cost control accounts. The adaptation of this concept is also in financial accounting. Costing does require the utilization of cost statements and cost sheets to meet the objective of cost control, cost ascertainment, and a guideline for the financial management.
Business Control Systems
These are systems through which businesses or organizations maintain an environment that is corruption free and discourages embezzlement activities by both the management and staff. The components of internal control that an organization undergoes through the evaluation process during the planning phase include an independent financial statement audit. The findings that culminate from the evaluation process measures the auditor’s level of detailed testing. It is the entitlement of the organization to ensure that they do not incur unnecessary fee during auditing. This is achievable through the implementation of well-organized internal control systems within the organization.
The integrity of managers determines the overall tone for the organization. The conveying of message integrity messages to staff through the employee company handbooks and manuals. An organization also utilizes policy manuals to provide training to employees on the importance adhering to management integrity. Nevertheless, policy enforcement procedures by the management are a key performance indicator in their commitment in being successful through the organization control systems.
Another key business control system has recruitment procedures that allow only the employment of competent staff. In addition, a business or an organization should have systems in place that allow the organization to retain their services for a long duration. This shows their intention to have diligently maintained accounting records. Retaining of employees enables yearly comparison of financial records. This organizational phase instills confidence in auditors as he or she can clearly observe the reliability of staff in the organization while going through accounting records. Consequently, it reduces risks for the organization during an auditor’s examination of material misstatement in the financial records.
The proper maintenance of records facilitates the existence of accurate documentation while conducting business transactions. Management of records includes document storage, safeguarding electronic records and back-up record procedures. This guarantees that there is no intrusion with transaction information in the underlying accounting records. An effective business control system seclusions the authoritative, custodial, and accounting functions. The environmental protection agency pinpoints that quality management of records reduces the overall operational costs. Additionally, it leads to improvement in efficiency thus minimizing litigation proceeds.
Safeguards within an organization prevent the entry of intruders thus their acquisition of company assets. There are tangible and intangible Safeguards. Tangible safeguards include locks on doors, while intangible safeguards include either computer or programs password. Safeguards are relevant and necessary in the organizational feature of business control systems. Majority of business owners will take measures to protect their inventories, cash, supplies, and all the information related to their business. However, most organizations normally overlook the protection of their blank checks, signature stamps, and the company letterheads though they require safeguarding. All company related information should be secured and only left for access by authorized personnel.
1.2 Identifying the information required to manage financial resources
The information required in the management of financial resources culminates from the organization meeting its requirements. Organizational requirements vary from operational activities, labor requirements, managerial activities and financial activities (auditing). These organizational activities determine the allocation of financial resources for their accomplishment. This kind of data will be acquired through resultant figures from the inventories maintained by an organization for instance budget, financial statements, operational activities, income statements, cash books and other cost activities within the organization. Organizations get their information maintains information such as human capital, working capital, and debts.
1.3 Explaining the regulatory necessities for managing financial resources
Any kind of business must apply the basic regulatory requirements to guarantee the success of that organization. These requirements facilitate the organization in function within the standards of the statutory provisions of that particular country. A good example is in the United States; where is the ‘Health and Social act 2012’, which regulates all the financial transaction of health organizations. It lays down the formulation principles that govern information relating to enforceability and formation of contracts. Additionally, there are the regulation standards of all the binding agreements that are made in a health organization. Some of the contracts include indemnity letters, bailment, pledges, and agency. It also gives the provisions of a breach of contract. The other vital regulation pertains to the issue of quality management. Federal bureau is the government body charged with the responsibility of enforcing quality standards within the organization that provides services to the general population.
The Care Tech PLC home uses the Generally Accepted Accounting Principles as a regulatory requirement for managing financial resources. These are the guidelines and practices that are accepted in the field of accounting internationally in standardizing financial documents such as balance sheets, cash flow statements and income statements. The organization follows these principles in reporting its financial information. The absence of these standards would give the organization staff the privileges in divulging financial information at their individual expense and not at the company’s thus affecting its overall credibility to investors and stakeholders.
The General Accepted Accounting Principles affects the following activities,
Measuring economic activity
Preparing and summarizing economic information
Disclosing information about an activity
Recording measurements at regular intervals
Regulation of the General Accepted Accounting Principles
The utilization of this principle is not a requirement by law but the body on Securities and Exchange Commission requires that all the public trading companies to adhere to these standards thus facilitating financial reporting. Care Tech PLC homes are a big corporation whose financial implications are similar to those of big companies hence the utilization of the accounting conception.
Evaluate systems for managing the financial resources in health or care organization
The evaluation of systems managing financial resources in health or care organization is by assessing whether they meet the expectations of their clientele and those of the organization itself. Care Tech PLC through its organization management policies and systems has handled all the potential risks for its health centers in terms of the resource allocation procedures where all the needs of the interested parties are met. The interested parties are patients and staff of Care Tech PLC. Through cost reduction methods and financial expediency, the organization has effectively adhered to the management guidelines thus achieving its goal of providing social care to a larger section of the population.
2.1 What are the different sources of income available to Care Tech PLC in the financial year 2013?
Dividends- the organization has always been keen in raising the total dividend per year in line with the movements’ objective of increasing the underlying earnings per share. In the year 2013, there was a development of 3.5% thus the board’s proposal of the final dividend of 4.68% per share from the 4.29 per share of the year 2012. This will bring the dividend total to 7.00 per share (2012:4.29 per share). The final payable dividends for the year 2014 that are subject to the shareholder approval will be 6.5 per share.
Other sources include secured bank loans and profit shares in the previous years
2.2 Analyze the factors that may influence the availability of financial resources in Care Tech PLC
Mergers and acquisitions
In the year 2013, the organization was able to acquire business combinations made that involve twenty-eight properties through the Quercus Healthcare fund and the acquisition via the Roborough properties. These asset acquisitions were previously under a lease by the group. This factor limits the organization financial resources as they used many funds in the acquisition processes.
Credit risk of the company jeopardizes the cash equivalents of the company making it impossible for an organization to source funds from financial institutions. The credit policy of the management and monitoring of the credit risk sometimes if unmonitored would reduce the chances of a prospective customer from getting credit. There are varying levels that are set on credit limit, which will depend on the value of the sale. Credit risk will impose sanctions on investors and financiers due to fear of unclear recovery procedures to recover their capital back.
2.3 Reviewing diverse types of budget expenditure in Care Tech PLC
This kind of budgeting is also the referral master budgeting. Is detailed, and its utilization is when there is a limitation on spending. Due to the acquisition by the Care Tech PLC, there has been a reduction in their income proceeds thus this form of budgeting to reduce spending on unnecessary expenses. In addition, it helps the organization in having a financial overview of the way the organization spends it capital concerning its projects. This type of budgets will issue comparable spending patterns over the years of the Care Tech PLC organization.
The Care Tech PLC being a corporation with whooping revenue of nine billion encounters some difficulties in controlling their capital in some sections of the company thus the utilization of problem-solving budgeting. It is more detailed than comprehensive budgeting, which has a more general perspective.
Care Tech PLC through its expansion programs utilizes this kind of budgeting to set aside capital for its shareholding interest in other social care and health or care facilities. This budget works for this purpose as it has a category inclusion that allows the organization to designate capital for a desired goal. Care Tech PLC uses this kind of budgeting in preparing their dividend proceeds to shareholders.
2.4 Evaluating how decisions regarding expenditure could be made in Care Tech PLC
This would involve the use of cost-benefit analysis in making its expenditure decisions. This will give the organization the necessary armory in making decisions that allow efficient and equitable allocation of resources within the organization. The cost-benefit analysis gives them an advantage in absenteeism of perfectly operating competitive markets and predisposition to a market where wealth and income distribution is not acceptable.
3.1 Explaining how financial deficits can be managed
This is achievable through better management of the cash flow of the organization and development of effective budgetary systems. Through management integrity, the company can monitor the spending patterns of the various departments of the organizations and impede serious actions against reckless spending by the staff of the organization. For Care Tech PLC, its acquisition policy would address this issue as the cash flow would be reduced. Optimization of the cash flow management would aid the organization in achieving financial health.
3.2 Explaining the activities to be taken in the event of suspected fraud
In health or care organizations there is the Health Insurance Portability and Accountability Act that deals with fraudulent cases. Fraud is a federal crime, and this legislation penalizes fraudulent individuals through a criminal charge penal code that issues a federal prison term of up to ten years. In the occasion that there is the notion of fraud, what should follow is reporting the perpetrators to the relevant government institutions that deal with crime and arraigned in court to answer for fraud charges. Health care fraud is a severe criminal offense that affects not only the concerned individual but also the government thus, their scrapping out as it surpasses the objective of health care services, which is to maintain a healthy population.
3.3 Evaluating budget-monitoring arrangements in health or social care organization
Budget monitoring of addresses the need for effective planning and strategy imposition thus catering for the expectations of the organization. Budget monitoring arrangements include cash flow forecasting. The key processes of assessment procedures include
Ensuring targets are being met through the monitoring systems of the internal budgets on a regular basis
Revising of the internal budget through a well-coordinated process
Provisioning forecast information to enable the organization to manage gaps within budget estimates.
Reviewing and improving the internal budget provisions through accurate monitoring of the budget processes in a timely fashion, while identifying areas of improvement.
Note: budget monitoring tracks the performance of the organization in various areas through the capital expenditure and the ongoing development projects. This will indicate any variations in the organizations projects such as overruns thus allowing corrective action by the management in addressing the matter. Routine reporting within an organization provides the necessary information on the present and future impacts that result from project activities.
4.1 Identifying the information required to make financial verdicts relating to health and social care service
At Care Tech PLC, financial controllers use financial statements, income statements, cashbooks, inventories maintained in financial departments in the organization. Financial controllers require sound understanding before making any decisions to avoid making losses and to avoid overstating statements and inventories as they may give the wrong information, which may in turn affect the entire organization. Despite financial department maintaining financial records, other departments like human resources department maintain information relating to employees, for instance, the number of employees, their addresses, and their respective departments. In addition, at Care Tech PLC, the management should maintain information that regards patients, for instance, the type of infection, method of diagnosis administered, date and other relevant information. This type of information helps in decision-making and highlights the reoccurrence of certain infections, diagnosis, and patients.
4.2 Analyzing the relationship between health and a social care service delivered, costs, and expenditure
There is an association between health care and social care services delivered in terms of costs, and expenditure. The following information analyzes information on health care services provided by the employees and their related costs and expenditures.
The number of employees correlates with the services offered by the organization with each year showing a considerable increase by the number of employees and patients’ turnout. This however increases the cost and expenditure at the organization to counter the excess number of patients and services they require. Over time, the organization in relation to its financial statements and other supporting documents shows a significant growth in terms of expansion in various departments, mergers and acquisitions, high number of patients, and high revenues generated.
4.3 Evaluating how financial considerations influence an individual through the health and social care service
Financial considerations that may influence an individual using Care Tech PLC health and social care services include affordability, individual’s income, the level of seriousness and type of the disease, living standards and the associated costs of service delivery at the hospitals. Other factors may include the availability of appropriate equipment of conduction various diagnostic procedures to patients with various disease. Expensive service delivery may block individuals who cannot afford the services offered by the organizations. Therefore, both organizational and individual financial considerations play a significant role of maintaining proper and affordable services to patients.
4.4 Suggesting ways to improve the health and social care service through variations of financial systems and processes
There are various ways of improving health care and social care services at Care Tech PLC in relation to financial systems and processes. The first requirement should ensure that, the organization maintains the general accounting principles and the required legislation to handle its financial systems and process. The systems and procedures should be accurate and effective to avoid cases of misrepresentation of data and information with the organization. In addition, the organization should employ effective and efficient control systems. However, the changes employed by the organization should cater for the patient’s needs without difficulties to serve more patients with minimal time and accuracy. Finally, the organization should improve on their modes of data collection and storage. The organization can improve this by employing software that helps pediatrics collects relevant data and storage. This is important especially in cases of reoccurrence of a disease or treatment in addition to ease of retrieving vital information regarding a particular patient or any other need that requires investigations. With the advanced technology, many organizations are now using advanced ways of collecting and storing data and other control systems that help the organization to run more effectively and efficiently.
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