Vick is a newly hired accounting head in Philadelphia hospital where accounting

records including but not limited to ancillary reports, pharmacy reports, and joint
venture agreement with Dialysis department is not proper. Purchasing and
Engineering and IT department has no records of its expenses. Instead, they rely on
the voucher and attachment as their proof that the money was used as intended to.
Engineering always complain about the repairs made to the ambulance despite that
the census of emergency room patient is low and request for transfer to other
hospital is not as high as compared to last year of the same month and last month.
Engineering also report the sudden increase in electricity charges as well as water
consumption. While IT department reported the increase in communication
expense but it does not stated the reason for such. Admission department reported
that in patient room were always full for the past few months due to covid 19. He
also reported on some losses on supplies to rooms which is indicated in the report
of the head nurse. The chief nurse reported that they are lacking of nurses to assist
the doctor and most of them extend time until late hours so they asked for the help
of the HR department. The Human Resource department then suggested and
implemented the use of ambulance to bring the nurses home and increase the salary
of nurses. Ancillaries including laboratory, radiology and cardiopulmo reported
increase in income due to outpatient census but together with that increase in
income, the reported expenses of each department for each test is quite high than
what was recorded last month. Purchasing reported that due to demand, some
supplier increased their price. He also reported that laboratories request for
outsource of some processes increased because some of the equipment
malfunctions. PhilHealth ,HMO and credit collection reported higher collection but
the chairman of the board seemed unhappy when he saw the balance sheet.
Required:

Analyze the situation of each department, the hospital as a whole, and as

management accountant by applying what we have discussed. How can you be of
assistance to the organization?

Purchasing Department

- Purchasing Department is responsible for keeping the organization’s

financial matter as healthy as possible, as they establish its procurement
policies and such, it is vital to keep record of its disbursement and/pr
collection properly. And not recording expenses and relying entirely on
vouchers as proof of disbursement or usage of money may result to an
enlarging hole as time passes by as this is prone to misuse/fraud of
money.

Engineering Department

- Similar to the situation of the Purchasing Department, this also lacks

sound accounting system because as mentioned, recording disbursement
and such is vital, and its inability to record it properly may negatively
affect the system not only in this department but as a whole.
- Moreover, its record system of complaints and repairs are not updated
nor monitored properly, thus, they always complain about it. There is a
lack of clear definition of its role in the hospital that is maybe the reason
why they question the frequent repair of ambulance car.

IT Department
 - This department lacks in communicating and providing a complete and
clear report of its records. Inability to provide explanation or even
description of its incurred expenses or collected income may result to a
greater chaos for the accounting department and for the whole hospital in
totality.

Admission Department

- Upon analyzing this department, I have not seen any negative incident to
which requires my assistance. I commend their good accounting system
to which they recorded any losses and reported their operations, however,
as usual there is always room for improvement and development.

Human Resource Department

- Under this Department, I commend their solution to the concern of the

nurses. However, they could have opened their institution to nurse hiring
in order to provide more manpower and support to those employed. I also
noticed that, perhaps, they have forgotten to communicate their decision
to use the ambulance car to the engineering and other concerned
departments making the latter departments to be confused with the
frequent repairs of the car despite the supposed to be maintained
usefulness or utility.

As a whole, upon analysation, the hospital is disorganized and the records and
the system itself is all over the place. Its accounting system is lacking organization
and proper coordination within the departments themselves. It is not standardized,
since, if it is, they should have been in abidance with what is proper in order to
avoid such ordeal. Moreover, upon analyzing the hospital, there is also lacking
with its accounting system and internal control system.

As a management accountant, I suggest that there should be changes or

alteration in this center problems – the systems (accounting and internal control),
there must be a redefinition of its policies and procedures and there must be a clear
passage of communication. I commend the use of voucher system, however, it is
not ideal to entirely depend on it, thus, I suggest to maintain proper accounting or
recording or perhaps bookkeeping all over the hospital management.

I suggest to allow strict supervision of tasks, rules, and policies, so that we can
ensure the smooth operation of each departments without overlapping or by-
passing certain departments. They should implement a clear communication with
its co-departments so that they are aware of its performance or operation that may
be connected to them, for example, with what happened with the purchasing
department and engineering department, those equipment malfunctions could have
been attended to by the engineering department if they conducted their equipment
recalibration and inspection in it. Also, the repair of ambulance car, Engineering
Department is blind-sighted by the fact that the ambulance car was also used for
the transportation of its nurses and not only related with ER patients and such.

Therefore, this could have been the reason for the Chairman’s dissatisfaction
upon seeing the balance sheet. It is noticeable that there is an increase with the
income and collection of the hospital, however, there is also an increase with its
expenses, thus, deeming those income and collection not plausible. Moreover, the
expenses incurred were all over the place deeming it unnecessary and
unexplainable to the knowledge of the management.