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Managing Financial Resources in Health and Social Care

INTRODUCTION

Financial resources are the monetary funds which are required to be managed by an business organisation to effectively operate in their environment (Financial resources, 2018). The main aim of this project report is to build an understanding about managing financial resources in health and social care. In this project report principles of costing and control systems are analysed along with information which is required to manage financial resources. These sources are discussed by analysing factors which influence availability of financial resources. Budget and expenditure is also mentioned in this report along with processes for managing resources in HSC. Heath and social care services are the organisations which provides health related services to society which the purpose of benefit them and not maximising profit. Various regulatory requirements along systems are also analysed in order to manage financial resources.

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TASK 1

1.1 Explaining principles of costing and business control systems

Costing is the method of determining and controlling the cost which is involved in operations. In the case of health and social care organisations there are various principles by which cost can be controlled and managed. Materiality is the most significant principle as it allows to accurately record all the cost which is related with material items so that the process of costing can be accurately applied. Transparency is another principle, under which all the expenses must be transparent and clearly stated in financial books so that they can be easily audited. Another principle which can help health and social care organisation in managing financial resources is consistency, according to which these type of organisations use a single method or process throughout the financial year to bring sustainability. Apart from costing principles, there are few business control systems which can also help in managing financial resources. The most important and primary system is cost centre approach in which all the costs which are expected to be incurred by the organisation are recorded under expenditure budget. Another system is cost computation in which organisations like national health services determine cost of every patient they attend in to order to bring efficiency in this activity (Fassin, Van Rossem and Buelens, 2011).

1.2 Identifying information required for managing financial resources

Information such as financial data which is required to manage financial resources can help in ascertainment of all the expenses and incomes which is incurred and acquired by the health and social care organisation. This information which is necessary to manage resources is data of salary which is provided to association's staff, expenditures which are incurred in organisational activities, costing systems and principles. This information helps in managing funds which are available to organisation. Organisation like national health organisation manage their resources such as grants and donations are managed by ascertaining data for method which is used to record cost (Benn and Dunphy, 2013).

1.3 Explaining regulatory requirements for managing financial resources

Health and social care organisations are engaged in providing services which requires high monitoring and controlling as they deal with lives of individuals. Even in the case of their financial resources, all the information must be disclosed and all methods must comply with regulations. There are several regulations which are necessarily to followed by these organisations. GAAP, generally accepted accounting principles states various rules and formats for recording accounting information which is mandatory to be followed by health and social care organisations. These principles are often used so that a familiarity can be developed about accounting statements. In order to audit all the accounting information of these entities care quality commission inspects whether, health and social care organisations are meeting national standards or not. Besides these two regulations, general accounting rules such as cost principle, full disclosure and many more are also required to be followed (Dela Rama, 2012).

1.4 Evaluating systems for managing financial resources in HSC

There are various systems that can be used for managing financial resources of health and social care organisations like NHS which are mentioned as follows. Reliable recording is the most important system which is used by health and social care entities. Under this system, a hack proof operating system is used in which all the important information about the finance of entity is recorded. Financial data such as income statement, balance sheet, tax statements, costing sheets and many more are recorded in this type of system. Operating systems are based on information technology due to which the data can be further interpreted for decision making process. Another system which can be used by health and social care organisations are HR software. This type of system enables it's user to gather and store information related to staff such as payroll of employees, their attendance data, equipment maintenance and many more. All these data is required to be stored as human resources are the most significant resources of operating organisations.

TASK 2

2.1 Discussing sources of income

Heath and social care organisations like NHS acquire funds from various resources. This type of entity does not usually charge from their patients as they work for social welfare. In order to efficiently operate these services, they acquire funds. Grants are the first most source from where NHS procures their funds. Grants are the monetary funds which are provided by governmental authorities such as central and local government in order to ensure smooth working of NHS and satisfaction of the society. Another source of funds which has been identified is charities. This source is acquired by individuals who voluntarily donate their value to the health and care organisations in order to provide benefit to society. Besides these sources, there are few more sources of funds also. These sources are public care departments such as foster care services, health care department and many more (Shaoul, Stafford and Stapleton, 2012).

2.2 Analysing factors which influence availability of financial resources in HSC

There are various internal and external factors which effects functioning of a health and social care organisations. Funds are procured by these organisations from external sources such as governmental authorities and social help due to which there are several external factors which influence availability of financial resources. Political factors are the most important influencers as it not important that ruling political parties are in favour of supporting health and social care organisations. Economic factors are the budget influencers. Grants acquired by NHS from government are pre decided by the budget developed under economic policies, if the policies are against these organisations there are major chances of attaining low value grants. Social factor is the thought process of individuals present in society which provides charities to NHS (Mang’unyi, 2011).

2.3 Reviewing types of budgets

Budget expenditure is a statement which includes all expenses which are incurred by the organisation or planning to be incurred by them. There are various kinds of expenditure budgets which can be prepared such as fixed cost budget, variable cost budget, inventory and administrative cost budget. Under fixed cost budget, all the fixed expenses such as property rent, licensing charges and salary to permanent staff is recorded to keep a record of all the expenses so that it can be audited. In variable cost expenditure budget, all marginal expenses as property maintenance charge, miscellaneous charges and wages are recorded. Administrative expenditure budget records all the expenses related to admin department such as salaries to non clinical staff, stationary charges and many more. Expenses related to all the inventories are recorded under inventory expenditure budget such as raw material, clinical tools and machineries (Baydoun and et. al., 2012).

2.4 Evaluating about expenditure in HSC

Decision making process in health and social care organisations is quite complex as they are required to consider numerous factors. While making decisions about expenditure, things which are required to be consider are balance between the expenses, growth of entity and competitors. While preparing a budget of expenditures it is important for this type of organisation to maintain a balance between fixed and variable expenses so that in the case of even low funds, available finance can be managed and clinical activities must be performed efficiently. Decisions about expenditures must be taken in such a way that priorities of organisation can be fulfilled. For example, in the case of NHS their top priority is to satisfy patients so the expenses must be managed so that they can provide maximum benefit to the patients.

TASK 3

3.1 Managing of financial shortfalls

Financial shortfall is the situation when health and social care faces condition of low funds. In this kind of situation, organisations like NHS should manage their finances in such a way that they will eliminate burden of additional cost. To manage their resources, budgets should be prepared in which future estimations must be included so that expenses can be pre planned and there will be no burden on organisational activities. Health and social care organisations must put efforts to acquire additional grants from government. If both of the above techniques results in vague, than organisations such NHS should adopt the technique of disinvestment of services. For example: NHS should consider on those services which can provide them immediate and huge cash (Social and Committee on Bioethics, 2013).

3.2 Explaining actions for events of suspected fraud

In current scenario, fraud is a common activity which is encountered by social services organisation. But in order to evade these frauds, there are various techniques which can be used. If health and social care organisations like NHS suspects fraud then they should immediately conduct an internal audit so that culprit or problem area can be identified. In the case of vague attempts by internal team, external auditors must be hired for this task. In order to set an example in the workplace for consequences of frauds. The culprit must be punished according to basic laws so that every individual of entity can learn the lesson out of that situation.

3.3 Evaluating monitoring arrangements in HSC

Budget monitoring is an activity of managing and controlling all the affairs related to budget and expenditure. In the process of budget monitoring process, organisation must audit and control all the activities of staff in order to ensure that the expenses are not going out of the budgetary limit. The main aim of this process is to monitor expenses so that health and social care organisation should not face the situation of financial shortfall. At the end of an financial period, all the expenses incurred must be checked and ensured that they are not over the spend limit set in the budget (Ottenberg and et.al., 2011).

TASK 4

4.1 Identifying information required for financial decision

Financial decision in heath and social care organisations are usually related with the affairs such as expenditures on clinical and non clinical operations, allotment of funds in various departments and many more. In order to take these financial decisions efficiently it is important for them to use reliable information. This information can be identified by assessing operations of heath and social care organisation. Financial data such as income statement, tax statements, cash budgets and balancesheets can be used to interpret conclusions so that reliable decisions can be taken. Along with financial data, non financial data can also be used such as performance of employees, client satisfaction, growth report and sustainability. This non financial information can be help organisation to ascertain problems areas and against those decisions can be taken (Klug, 2011).

4.2 Analysing relationship between Health and social care service

Services which are provided by health and social care are directly related with their costs and expenses. It is considered that the services are the reflection of their price. But this consideration is not valid in the case of health and social care as these organisations like NHS works for the betterment of society. Every patient of these organisations will be treated equally regardless of their status. Still, due low availability of expenses services of these entities get affected. For example: if NHS only procures half of the funds then they has to prioritize their activities and provide services which can fulfil requirement of patient and can also be easy to the pockets of these entities. This relationship is adverse in nature as if the costs and expenses are high on service then management of NHS will provide not so satisfying services and if the cost and expenditure is low on any service than they has the scope of providing better services.

4.3 Evaluating financial considerations

Financial considerations are the monetary values which are paid by the patients attaining services from heath and social care. As these organisations does not work for profit maximisation, value which is required by these entities are comparatively less. These considerations does impact on service users. This impact can vary according to the user. If the user is willing to pay high value but against the high standard services, then health and social care organisations has to provide and develop those kinds of services. But in this situation there will be various patients who can not afford that high value service and even there is a possibility that these patients will not acquire any clinical service. This problem can be solved by the approach of equality.

4.4 Suggestions

Organisations which are provided by helath and care services like NHS can enhance their performance by using few techniques. They should use the process of budgetary control so that all the expenses can be monitored and controlled. These organisations should be ascertained cost involvement of every patient so that record of every patient can be maintained and it can be easily audited by internal team as well as by external auditors (Schwartz and et.al., 2013).

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CONCLUSION

From the above project report, it has been concluded that managing financial resources in a health and care organisation is a crucial task to perform but with the help of various systems and techniques which are identified above this can be done efficiently. Various issues in procuring the funds are ascertained in this project along with the measures overcome those issues. Several regulations are also identified in this project which controls and monitors various aspects of these organisations such as expenditures and budgetary control. General accounting principles are also mentioned in this report to build an understanding about the management of financial resources such as grants, funds, charities and many more. Sources from which these funds are acquired are also discussed in order to identify the situation when these organisations face financial pitfalls.

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