Reporting_Practices_and_Ethics

Reporting Practices and Ethics Denise Sredensek June 12, 2011 University of Phoenix HCS 405 Sandra DiPietro When the headlines read that SEC was to investigate Goldman Sachs for defrauding investors by misstating and omitting key facts, no one really knew what that problem was, until later. For those who watched the trial, discovered the Securities and Exchange Commission had alleges that Goldman Sachs structured and marketed a synthetic (fake) collateralized debt obligation (CDO) that hinged on the performance of subprime (no so favorable) residential mortgage-backed securities (RMBS). This appears to be bad enough, however, this was not the crime. The crime was committed when Goldman Sachs failed too disclose to investors vital information about the CDO, in particular the role that a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a position against the CDO (www.sec.gov.2010.). If anyone knows what that means, please tell us all. Fraudulent behavior, misconduct, waste, and abuse are characteristics of humanity. Unfortunately, these traits are often found dwelling in areas where there is money. The following is a report on financial management in health care. The following topics will be included: generally accepted accounting principles, corporate compliance, ethics, and fraud. We will also include a summary of the four elements of financial management as well as examples of ethical standard of conduct and financial reporting, with an explanation of each. Generally Accepted Accounting Principles (GAAP), provide guidelines for a variety of business practices to be objective and realistic regarding their overall financial performance report. GAAP places a limit on CEO’s and creative accounting. It is important to understand the definitions of business, even to the smallest degree. The challenge is what is accurate, objective, and fair financial reporting in one individual’s eyes may not be so in another’s. Different methods of depreciation will result in a different financial picture. Accounting policies and procedures need to be developed to endorse and ensure consistency of practices nation wide and organization-wide (CBS News). An article written by the CBS News, Preventing fraud and abuse fallout-healthcare industry, lists two examples of the results of government’s pursuit of fraud, waste, abuse, and noncompliance between 1989 through 1994. Summaries of findings include: Under the False Claims Act, a Pennsylvania hospital agreed to pay $234,880 in penalties and restitution and to implement a three-year instructional program for its employees on the subject of proper Medicaid billing techniques. A major blood-testing laboratory headquartered in California agreed to pay a $100 million settlement for manipulating physicians into ordering unnecessary tests on Medicare patients. The settlement was the largest ever reached between the government and a provider in a healthcare case. The laboratory also paid a criminal fine of $1 million and reimbursed state Medicaid agencies approximately $10 million for losses attributable to its conduct. The healthcare industry definitely shows the potential for fowl play. The healthcare industry is relatively a new concept, at least the ever changing levels within it are new; after all, we now know how to keep people alive much longer than ever before. This may constitute a different set of issues we need to learn to incorporate when considering financial reporting and management. Four components are recognized in financial management and each one is a separate undertaking. They are: planning, controlling, organizing and directing, and decision-making (2011, p. 5). To summarize: planning involves a financial manager must recognize the objectives of the organization and the steps it takes to achieve them. Controlling necessitates the manager to study current reports as well as the feedback from past reports. This comparison often shows where the organization may need attention because that area is not effective (2011, p.5). Controlling also implies that plans are complied. Organizing and directing is a day-to-day task and probably is the most important component of all. This manager has two parts, they understand the organizations resources and uses them to attain the desired results of the plans set forth and they direct to ensure effective resource use and offer daily supervision (2011, p.5). The principal function of decision-making entails the examination and assessment on information and data that come from the other three components. Throughout the years, the Healthcare Financial Management Association (HFMA) has promoted and publicized a rigorous code of ethics for healthcare financial managers (Weinheimer, 1994). The code is one that leaves no one to doubt a managers intentions or interpret is actions as being anything other than for the good of all and this must follow the individual in both personal and professional endeavors. The HFMA has set forth examples of ethical standards of conduct, which reflect financial reporting. Stressing the importance of presenting information fairly, striving for individual excellence, maintaining appropriate confidentiality, promoting the understanding of financial management issues, and contributing to increase public understanding of the healthcare field (Weinheimer, 1994). On the opposite end of this spectrum are the actions of Goldman Sachs. Some individuals thought the fraud of Goldman Sachs was an ingenious business tactic. As creative as it was, it did not succeed, due to the immense losses that it was responsible for in which people had to endure. Under any other circumstances, who knows what would have occurred. Goldman Sachs took and probably still does great pride in being underhanded and deceitful in their endeavor. Their interests are not the public; it is in their own. References Baker, J.J., & Baker, R, W. (2011). Health Care Finance: Basic Tools for Nonfinancial Managers (3rd ed.).Sudbury, MA: Jones & Bartlett Publishers. CBS News. The CBS Interactive Business Network. Retrieved June 11, 2011, from http://www.bnet.com/news-analysis/healthcare'tag=sec-industry7. Generally accepted accounting principles defined. Retrieved June 11, 2011, from http://findarticles.com/p/articles/mi_m3257/is_n4_v46/ai_12372799/'tag=rbxcra.2.a.44 U.S. Securities and Exchange Commission. SEC Charges Goldman Saches With Fraud in Structuring and Marketing of CDO Tied to Subprime Mortgages. Retrieved June 12, 2011, from http://www.sec.gov/news/press/2010/2010-59.htm Weinheimer, Christopher. (1994, January). Healthcare Financial Management. Ethical conduct more necessary than ever. Retrieved June 13, 2011, from http://findarticles.com/p/articles/mi_m3257/is_n1_v48/ai_14980641/'tag=rbxcra.2.a.11