Concepts of Accounting Principles and Ethics Articles


Hospitals, nursing centers, dispensaries and other healthcare organizations need proper financial management skills to boost their services. Therefore, these healthcare facilities ought to apply standard rules in order to meet this condition. In addition to proper management of healthcare finances, administrators must plan for long-term finances, monitor and appraise factors that hinder their finances both externally, and internally. With the ongoing financial hardships, healthcare facilities face constraints from all stakeholders whether insurance companies, federal state or third party credit providers. For example, Americans want to overhaul the current healthcare system and replace it with an affordable one.

The main aim of instituting proper financial management and feasibility measures in healthcare facilities is to bring accountability and enable realization of higher revenue. Any organization, whose motto is accountability, becomes a leader in outsourcing better and excellent services to its clients. Therefore, to meet accountability and revenue target in healthcare facilities, proper employee and accounts payrolls, constructed under management information system are necessary. Other factors include revenue and financial statements accurately constituted and an online billing system. The paper will explore financial management of healthcare organizations using articles on Generally Accepted Accounting Principles (GAAP), and the other on, Corporate Compliance, Ethics or fraud and abuse.

Generally Accepted Accounting Principles (GAAP)

At least every healthcare organization in United States applies GAAP principles in executing its financial and accounting activities. This is because, these standards assists an organization in preparing, processing and presenting detailed financial information to its clients. Any organization working under GAAP policies and regulations, allows accountants to prepare financial reports and statements based on GAAP standards. Nevertheless, the reason why many organizations choose GAAP as excellent accounting guidelines is that, information created from GAAP rules and standards is consistent, reliable, relevant and compatible. Indeed, success of any organization depends on clear financial accounting standards done with consistency and integrity.

GAAP is a collection of principles which when combined, help in managing accounting operations of an organization. For example, GAAP contains inscribed rules and standards on sincerity, consistency and promptness. If accountants apply these three principles effectively in preparing an audit report, data full of facts, result. Financial statements prepared under GAAP standards reflect each transaction based on expenditure and income. To avoid deliberate and accidental mistakes in preparing financial statements, a GAAP financial audit report outlines responsibilities of an auditor, client and put every information into a well-defined context.

Like business enterprises, healthcare organizations operate their business opportunity to realize profit. However, in healthcare organizations, the mode of executing services may be different from that of commercial goods exchange. One of the reasons why GAAP standards are beneficial is that, a GAAP financial statement reflects clarity rather than confusion. For example, healthcare care accountants cannot mix incoming hospital subsidiaries with mortgages in the same column. Thus, it becomes easier for anybody to access debts and credits of healthcare institution.

GAAP rules also assist healthcare institutions to prepare a report that accommodate other special reports. All financial statements prepared under the influence of GAAP, comply with regulatory provisions such as taking responsibility on how to swathe loans, analyze dividends, submit to dividends and make other payments. All these special reports foretell financial operations of healthcare organizations. (Bradford, 2007, para. 2-13).

Another benefit that GAAP offer healthcare organizations, is comparability. If a hospital decides to prepare a financial statement on its operational cost, first, both hospital assets and liability undergo pricing. Secondly, accountants can do a buy-sell GAAP standard and transfer liabilities pursuant to GAAP rules and buyer-seller agreement. As a result, the statement prepared can indicate whether the hospital is operating at a loss, profit or is constant. Thus, GAAP principles create comparability, which attract more investment into healthcare facilities.

Corporate compliance, ethics or fraud and abuse

Over the past years, healthcare facilities have been involved in fraud and different abuses. Charged with administration responsibilities, healthcare administrators misuse healthcare finances leading to financial constrains. Corporate compliance and ethics bring medical ethics in healthcare institutions. Medical ethics comprises of accurate and candid billing, referring of patients, and making just decisions based on what is right or wrong without pressure.

Even if GAAP rules apply strongly when healthcare accountants prepare financial reports, without ethics, fraud and abuse can occur ultimately. Healthcare receivers demand accountability to their premiums. In many occasions, patients demand receipts because many healthcare facilities become unwilling to issue them. On the other hand, physicians can be unethical. Take for example a patient suffering from AIDS. Instead of a physician coding the patient, the physician blames the patient of immorality. These abuses can hinder patients from receiving services from a certain healthcare organization. As a result, if all clients withdraw, there is likelihood of such an organization collapsing due to limited finances.

Since fraud and abuse cases arose at an alarming rate, healthcare organizations became under collapse because of desertion. However, due to these threats, healthcare organizations formed committees to oversee ethics within an organization. Ethics committees offer guidance and counseling to patients and unruly physicians as a way of promoting healthcare coherence. On financial matters, these committees develop healthcare budgets. Under this budget, there are explicit modalities on how to lessen liabilities, increase revenue and savings and a clear financial statement indicating the actual generated revenue within an operation period. This budget allows healthcare organizations to effectively supervise and convene fiscal conditions. (Timothy, Byasse, 2000, para. 1-9).

Moreover, some corporate compliance committees have suggested some financial assistance from external sources, which help in offering services to those who cannot afford. Through compliance and ethics principles, many healthcare incurred loses are now minimal. Under American laws, there is a law on corporate governance that provides direction on running healthcare organizations. Largely, this act helps healthcare organizations in making sound financial management policies. Under corporate governance act, healthcare organizations must have an adequate amount of resources, prove ethical, and conduct services based on policies. In addition, healthcare organizations must audit their financial reports after a certain period to gauge its operational standard. Nevertheless, though this act is a law in force, it helps healthcare organizations to manage their finances effectively and offer quality service to clients.


Generally Accepted Accounting Principles (GAAP), are beneficial in executing proper, full-integrity, and profit-driven financial management system. Most American business enterprises register profits due to application of GAAP rules and regulations. The main purpose of these rules is to help organizations manage finances properly. Healthcare organizations on trellising these massive GAAP benefits deployed these standards into their financial system. Today, healthcare organizations applying GAAP standards continue to perform fit in managing finances.

Corporate compliance and ethics helps healthcare organizations to execute ethics in offering services. Many healthcare organizations manage finances through preparing financial statements, carrying audit reports, doing medical research and keeping ethics at above board. Notably, the success of healthcare organizations will depend on how well; administrators apply ethics and rules to manage finances.


Bradford, T. (2007).GAAP and Accounting Standards. Web.

Timothy, S., & Byasse, J. (2000). Effective health care corporate compliance-implementing HIPAA and other Compliance Programs. Bnet. Web.


Campbell, S. 1998.Complex regulations are driving hospitals’ corporate compliance efforts. Health care strategic management. 16(4), 17-27.

Douglas, P., Moshe, S., & Linda, A. (1992). Is There a Gap in Your GAAP Library? Journal of Accountancy, 173.

Kravit, P.K. (2005). International Harmonization of Accounting Standards. GAAP. Duke Journal of Comparative and International Law, 12,353.

Russo, R., Russo, J.J. (1998). Healthcare compliance plans: good business practice for the millennium. Journal of Ahima, 69(1), 24-31.

Cite this paper

Select a referencing style


AssignZen. (2023, June 19). Concepts of Accounting Principles and Ethics Articles.

Work Cited

"Concepts of Accounting Principles and Ethics Articles." AssignZen, 19 June 2023,

1. AssignZen. "Concepts of Accounting Principles and Ethics Articles." June 19, 2023.


AssignZen. "Concepts of Accounting Principles and Ethics Articles." June 19, 2023.


AssignZen. 2023. "Concepts of Accounting Principles and Ethics Articles." June 19, 2023.


AssignZen. (2023) 'Concepts of Accounting Principles and Ethics Articles'. 19 June.

Click to copy

This report on Concepts of Accounting Principles and Ethics Articles was written and submitted by your fellow student. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly.

Removal Request

If you are the original creator of this paper and no longer wish to have it published on Asignzen, request the removal.