The concept of stakeholders in healthcare
The concept of stakeholders in healthcare basically refers to entities and individuals that are integrally involved in the running and functioning of healthcare systems and would substantially be impacted by changes that occur in the healthcare systems. The major stakeholders in health care are physicians, employees, patients, insurance firms, pharmaceutical companies, and government.
The accounting principle of going concern implies an entity will proceed with its core operations in the future and will not be forced to discontinue its operations or liquidate as a result of any reason. In this regard, a healthcare organization is assumed to exist during its current time period and will continue existing for the foreseeable future. According to this principle, healthcare organizations should not be forced to halt their day-to-day operations nor liquidate their assets for any reason. As a result, healthcare systems continue to value their assets and liabilities in cash as if the liabilities will be paid in cash when the time comes. This principle helps organizations to continue prepaying and accruing expenses.
The difference between accrual accounting and cash accounting is based on the recording time of the expenses and revenues. For instance, accrual accounting requires that revenues and expenses be recorded when earned, irrespective of the period the money is received. However, in cash accounting, no recording of the transaction is made until the time money is received. As a result, the revenues in cash accounting are not recorded until the money I received. Similarly, the payment is made before recording the expenses. At the end of the year, the adjustment made include accrual adjusting entries for revenues, which accounts for the transfer of the organization’s liability earned to the respective revenue account and accrual adjusting entries for expenses, which records the transfer of used asset on the expense account.
The accounting principle of consistency states that a firm should use one accounting treatment to account for similar events as well as transactions overtime when preparing its financial statements. This helps companies to avoid manipulation of financial information. To illustrate the principle of consistency, ABC Company used the method of a straight line to calculate the depreciation on its fixed assest in year 1; the company decided to use a reducing balance approach to calculate depreciation in year 2. For year 3, the company switched back to the straight-line method to calculate the depreciation. In year 4, the company invited auditors who identified that the consistency principle of accounting was not being followed. This resulted in errors in the calculations of the company’s fixed assets.
The accounting principle of materiality states that companies may disregard other trivial matters of items, but must disclose the information on the things that are important to the report audience. As a result, the concept of materiality ensures that companies do not withhold the information considered critical to the investors, regulators, creditors, or stakeholders.
Full disclosure principle. This accounting principle requires a firm to report all necessary information about their financial statements, including other relevant events or information to interested individuals or parties that are accustomed to reading the information contained in the annual financial report.