Describe a good starting point in their efforts to help physicians understand the group's financial picture.
Answer # 1:
As described in the case only a few of the Physicians are able to read and understand the financial statement. Thus a seminar should be conducted which helps them understand the basics of accounting. In this seminar the Physicians should be taught about the cost, revenue /expenses, and the reading of Income statement and Balance Sheet etc. Thus in this way they would be better able to understand the overall financial position of the company.
Question # 2:
Develop a conceptual framework illustrating the process you would put into place to help physicians improve their understanding of their financial status. What are the mitigating and enabling factors?
Answer # 2:
Creation of conceptual frame work is an attempt to define the nature and purpose of accounting. It must look into the theoretical and conceptual issues related to the financial reporting (ACCA 2011). The financial reporting main purpose is to provide useful information into economic decision making; this conceptual framework will determine how transaction is to be reported and measured. In other words how will they be presented to the end user?
Conceptual Frame Work
Question # 3:
Describe the process you have suggested in your conceptual framework.
Answer # 3:
The content of the conceptual frame work would be as follow
Objectives (Level 1)
The objective of the financial statement is to provide an insight of the financial position of the Hospital .As to how well the Hospital is managed, what are the resources available to the hospital. Who is it going to be useful for e.g. it would be useful to the directors, Physicians and staff members?
Qualitative characteristics of Financial Statement (Level 2)
The Qualitative factors which the financial statement should comprise of are Understandability, Relevance, Reliability and Comparability. The information provided should be easily understandable by the ultimate users of it like directors, shareholders and other staff members. The information reported in it must be relevant to the organization, nothing should be omitted which can influence the decision of the users (Ernst & Young 2010).The financial statement must be reliable in term of information in it , no errors should be committed in reporting. Lastly it should be comparable with the other financial statement of different periods.
Elements (level 2)
The Hospital will produce important information but it will depend , to whom it is relevant. It will be producing Balance sheet and Income Statement etc thus it will depend on the user, whether it is relevant to him or not.
Assumption (Level 3)
It has four parts, the entity part says that hospital is separate from its owner and is a different entity. Monetary unit assumes that inflation level will remain the same .Going Concern assumes that the hospital business would continue on forever and last periodicity assumes that the life of hospital can be dived into different sub periods.
Principle (Level 3)
It has four Parts ,Historical cost assumes that prices of ...