What are the differences in financial reports for a non-profit entity vs. a for-profit entity?
Financial reports are annual documents, which are prepared by accounting departments in order to inform companies of their financial position at a given time. They are common in both non-profit and for-profit entities since they give a clear picture of the financial ability of a company. However, the reports are not similar in terms of their content and the approach used to present them. The aim of for-profit entity reports is to make profits while non-profit entity reports focus on service provision.
The first difference between financial reports for non-profit entities and for-profit entities is that for-profit entity reports indicate efficient management of all finances for them to win the confidence of investors. On the other hand, non-profit entity reports indicate the little finances that they require to run their activities. The biggest percentage of their finances is used to fund programs that improve the lives of disadvantaged people (Jane, 2013).
The second difference is that financial reports for entities that focus on profit, making provide information about their services in order to earn more money. On the other hand, financial reports for non-profit entities indicate the most successful programs and how they can improve their services to benefit disadvantaged people.
The third difference between financial reports for non-profit and for-profit entities is the manner in which the reports begin. For-profit entity reports begin with a letter to the management that summarizes the organization’s previous financial year and challenges that it encountered. On the other hand, non-profit entity reports begin by reiterating the purpose of the organization and its benefit to disadvantaged people.
How do different departments in a hospital receive financial information?
Most hospitals are comprised of different departments, which offer different services. This means that communication is very important in order to coordinate services that are provided in the departments. One of the most important types of communication that should take place in hospitals is the transmission of financial information to different departments. This is important because it enables each department to understand the financial position of the hospital and how departments should utilize the available money to perform their activities.
An accounting department is responsible for disseminating financial information to other departments in a hospital. The department is comprised of experts who possess advanced financial knowledge. They hold meetings and plan on how to handle all financial matters in the hospital. The department prepares budgets, payrolls pays bills, and handles all income that is generated by the hospital. The financial reports are summarized for everybody to understand them.
Written financial reports are then given to departmental heads, who are responsible for delivering them to junior employees in their departments. In case of issues that require clarification, employees from different departments can also access the accounting department directly. This ensures that they are regularly updated on financial matters (Dolphin & Reed, 2012).
References
Dolphin, R., & Reed, D. (2012). Fundamentals of Corporate Communications. New York: Routledge.
Jane, M. (2013). What Are the Differences in Financial Reports for a Non-Profit Vs. a For-Profit Entity? Web.