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Accounting Ethics Essay


Accounting information is vital to internal and external users of financial accounts; accountants are expected to present accounting facts in logical and genuine manner to facilitate their relevance in decision making. Such information is required by managers, shareholders, government, potential investors, investors, capital lenders among others.

Hospitals are no exemption to the need of quality accounting data and information; the accounting department in medical facilities is a support department thus when it offers quality information it facilitates provision of quality and affordable medical services (Cleverly & Cameron, 2007). This paper discusses financial reporting practices and ethical standards in health care finance.

Financial reporting practices

The accounting field is regulated by international and national accounting and auditing bodies that require organisation to make their books in a particular manner that can allow comparison and flow of information. The finance department of a medical facility needs to be equipped with qualified accountants to keep books of records and produce financial statements as required by regulators.

The main required accounting statements are Consolidated Balance sheet, consolidated Cash flow statement, and Consolidated Income statements, Consolidated statements of stockholders’ equity and comprehensive income, and changes in assets ownership.

For decision-making, accounting information required in a hospital set up is revenue and costs information, incurred when providing services; there should be effective internal control to ensure that there is transparency in use of finances.

The main source of revenue for a hospital is fees charged to patients when they receive various services from the hospital; the information of revenue is with the accountants thus they should offer the information for decision-making. There are other sources of revenue which include grants and government funding, they should be considered when making decisions.

Disclosures made to external and internal accounting information users should be vetted to ensure there is transparency and the right, adequate and acceptable information flows to the right people. Accountants should thus be guided by acceptable code of conduct as far as reporting is concerned (Duska & Duska, 2003).

Ethical requirements in financial reporting

International accounting standards have ethical expectations that they have for accountants; accountants should uphold integrity in all their processes; medical facilities finance department has the role of complying with the set accounting ethics. They should ensure that they perform their duties with honesty and for the interest of all parties to the accounts.

It is understandable that this situation may have been a one time and thus deserves some consideration. The dependence on accounting information in hospitals raises the need for accountants to act with high level of professionalism and uphold acceptable accounting ethics.

When accounting reports are produced, they should reflect the actual situation of a company so that they can be used for strategic decision-making. Resources in an organization are scarce; thus, they need to be well allocated to various programs.

For efficiency, financial managers prioritise the project to be undertaken in a particular time and how. This may involve a day-to-day allocation of available resources in different programs.

Financial management information is used for decision making. They assist management in making current and future decision regarding the operations in a business. Information is crucial for decision-making since it offers a number of alternatives to choose.

Many are the times that management accountants have information that can injure a company or one that can be of great assistance to the public. When faced with such a challenge, accountants should always act in the best interest of stakeholders contained. This calls for independence and need not to bow to pressure from the management company or the public.

They should make high standard decisions and should not knowingly cause a company trade whilst insolvent. when it comes to statutory requirements like making tax returns, its ethical for accountants to ensure that the legal requirement of the nation are complied with; compliance is in terms of giving correct information without being late, correct reporting and making due payments.

There are changes in accounting field initiated by local policies like finance bills (mostly on matters relating to taxation) and international bodies like International accounting bodies (IFRS and ISA). For competency, which is an element of ethical behaviour, an accountant is expected to be up to date with such changes.

An example of a change in international accounting standards is the change in new ways of accounting for SMEs in 2008 and change in accounting for leases (ISA 17) in 2010. A member of these bodies must be up to date with such changes (Baker & Baker, 2011).


Financial management is important to medical facilities; it offers quality information that can assist to improve the quality, cost, and gains in medical facilities.

To have high compliance, health facilities finance department should observe rules and regulations of national and international bodies; when these rules and regulations are complied with, then the accounting disclosures made will be in accordance to the law, acceptable, complete, and offers a true and fair view of their medical facility.

Financial managers assume the duty of care to internal and external users thus should perform their duties with integrity; they should follow code of ethics required for the profession.


Baker, J. J., & Baker, R. W. (2011). Health Care Finance Basic tools for Nonfinancial Managers. Sudbury: Jones and Bartlett Publishers.

Cleverly, W. O., & Cameron, A. E. (2007). Essentials of health care finance (6th ed.). Sudbury, MA: Jones and Bartlett.

Duska, F., & Duska, S. (2003). Accounting ethics. Massachusetts: Wiley-Blackwell.

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