Accounting plays an imperative role in any medical office, sometimes serving as the supporting force allowing the office to work at its fullest potential in an organized manner. Every type of business needs an accounting department. A business can’t function without one. Accounting and bookkeeping are especially vital for a doctor’s office, clinic, or hospital, as medical billing can be complicated and difficult both payables and receivables.
Generally Accepted Accounting Principles (GAAP)
These are principles, standards, and procedures of accounting used in the compilation of financial statements. They are the accepted methods of recording and presenting financial transactions and necessary data. Generally accepted accounting principles can travel across all industries, while some business types will need additions that cater to that business. The medical field holds generally accepted accounting principles and has additions tailored for medical businesses and their specific accounting needs.
Compliance with these principles is required by law. In non-compliance, a business may be fined by the United States Security and Exchange Commission. The business could also be shut down if the violations continue. Other than following the general principles, each organization may have slightly different procedures regarding the nature of their operations. However, even if that is the case, compliance with the Generally Accepted Accounting Principles must be followed.
Elements of Financial Management and Accounting
There are four key elements in Accounting and Financial Management. These elements are found below.
Planning
Planning enables a business to develop clear guidelines and goals to ensure that the office is successful in the present and continues to thrive in the future. Guidelines and goals also allow managers and decision-makers to track progress. This tracking is essential to develop the business further and make adjustments as needed.
Controlling
Controlling gives the business management team the ability to ensure that all departments involved in the business adhere to the guidelines and contribute their part towards achieving goals. It also enables a business to identify problems that come up and give those who can fix the issues needed to ensure it is successful.
Directing and Organization
The Directing and Organization element is one of the more essential aspects of financial management. It ensures efficiency, allowing an office to work at its fullest potential. Problems may arise daily, and this element helps fix these problems by giving businesses the chance to work through financial issues without affecting the bottom line.
Decision Making
Decision Making utilizes the other three elements (i.e., controlling, planning, and directing and organizing) by analyzing all of the gathered information and coming up with final decisions to improve and optimize financial management.
Ethics and Accounting
Accountants are bound to the highest standards of ethics compared to any other profession. After all, the information received via financial statements and bookkeeping is used to make critical decisions related to a business’s financial standings. If an organization doesn’t have an accounts department, such information would not be available to the business’ decision-makers.
Concerns regarding ethical standards, along with corporate and social responsibility, have increased in their importance. These days, both private and government organizations have objectives to mark and enact proper and stringent ethical standards. Organizations are also subject to review to ensure these guidelines, policies, standards, and goals.
Accounting in Medical Offices
An accounting department working in/for a medical office holds immense importance for its role in the business’s success (or failure).
First, it should follow the GAAP guidelines. This will ensure that the organization is not penalized by law enforcement in any manner. The accounting department’s mistakes could result in legal procedures that would harm the entire medical office’s reputation.
Simultaneously, an efficient accounts department can provide information to decision-makers who can streamline operating procedures to ensure the medical office’s financial success. Although one of the essential medical offices’ tasks is to provide medical services, it can’t do so without an accounting department that is effective and successful.
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