Managing Financial Resources in Health & Social Care - Assignment

Managing Financial
Resources in Health and
Social Care

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 The principles of costing and business control systems........................................................1
1.2 Information needed to manage financial resources...............................................................2
1.3 The regulatory requirements for managing financial resources............................................2
1.4 Evaluation of systems for managing financial resources in health and social care...............3
2.1 Diverse sources from where income may be encountered ....................................................4
2.2 Factors which influences the availability of financial resources...........................................5
2.3 Different types of budget expenditures..................................................................................5
2.4 Decisions about expenditures are made.................................................................................6
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Financial resources includes all financial funds available with the companies. Money held
with firms to operate the daily activities, liquid securities and managing credit limits (Braveman,
2016). Proper management of available financial resources is very important for attaining the
efficiency along with effectiveness. For understanding the management of financial resources in
heath and social care, NHS England is selected. The selected organisation was founded in 2013
and performs its operations under Department of Health and Social Care having head quarters at
Leeds, UK.
The report includes principles of costing and business control systems, information
needed to manage financial resources, regulatory requirements for managing financial resources
along with evaluation of various systems used for managing financial resources. In addition, the
diverse sources if income that may be encountered, the factors which may influence the
availability of financial resources in health and social care, different types of budget
expenditures, decisions about expenditure are made within a health and social care organisation.
TASK 1
1.1 The principles of costing and business control systems
Costing: It is a technique which helps in assigning various costs involved in the
production a product or service. It plays a crucial function to identify the associated costs to
distinct elements in health and social care for catering their services. For developing the effective
costing systems, NHS England follows such principles:
Principle of data accuracy: the principle says that all the data must be recorded on time and in
accurate manner to improve the confidence of keeping records (Finkler, Smith and Calabrese,
2018 ). The managers of selected firm ensures that data is accurately recorded and used to
improve the costing system to maintain the consistency.
Principles of transparency: the principle states that all the operations performed must be
transparent, clear and easy to understand to others. The performers of the firm provide clear and
open information of the costs associated in providing distinct services.
Business control system: It includes the principles, plans as well as policies used to
track and monitor the organisational resources performances to achieve the objectives. Various
business control systems adopted by the respective company are the following:
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Cost accounting system: Such system helps in estimating associated costs of various activities
involved in production of products or services for inventory valuation, analysis of profits and
controlling costs. In NHS England, this system is used to enable the pricing costs accurately.
Budgetary control system: It is a system of measuring and controlling the expenditures and
incomes with the planned incomes and expenditures (Zhao, Wang and Fan, 2015). This system is
followed in the selected organisation to providing a framework of limiting the expenses over
incomes.
1.2 Information needed to manage financial resources
Every organisation requires information to manage its financial resources. The managers
of NHS England collects information from different sources to plan efficient management of
financial resources. Various activities determine the optimum financial resources to maximise
the profitability. The internal sources are the financial statements where as external sources are
the tax compliance authorities. The selected firm needs to analyse the available assets such as,
cash in hand, furnitures, buildings, debtors and many more they can collect the information from
the past and current financial statements (Greene, 2017). All the information are clearly
presented in the balance sheet. The details needed related to taxation can be collected from the
compliance authorities. The technical compliances calculates taxes on the basis of provision of
several tax laws and provide information accordingly. The executives needs the information
related to the expenses and revenues to determine the profitability and managing expenditure.
This information can be collected using business control systems. The data related to inflows and
outflows of cash of any accounting period can be generated from the cash flow statements. Such
statement helps the accountants to provide information related to the cash management for
paying bills, acquiring assets, handling various expenses and many more. The information
related to properly management of financial resources can be availed from various internal as
well as external sources of respective organisation.
1.3 The regulatory requirements for managing financial resources
Regulation is the monitoring framework which performs the legislation tasks to keep a
check on the operations of any organisation. There are various regulation which comply in
management of financial resources. The regulations helps in performing functions according to
the standards set by statuary provisions (Holt-Lunstad and Uchino, 2015.). The managers of
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NHS England follows the regulations, principles, provisions set by the following authorities for
managing financial resources:
 HM Revenue and Custom: such authority sets the tax level and defines various tax types
to be paid by the organisations. This authority is responsible for administering the tax
system. The tax policies are adopted and followed by selected business to pay different
taxes such as capital gain tax, corporate tax and other appropriate taxes.
 Generally Accepted Accounting Principles: GAAP provides principles, guidelines and
practices for managing financial resources. The accountants of chosen entity follows all
the principles at the time of compiling the financial statements and preparing reports
related to financial informations.
 Care Quality Commission: Various fundamental standards are designed by this regulatory
to provide safe, secured and high quality cares along with motivation to improve such
services (Sommers, Gawande and Baicker, 2017). The managers while preparing the
statements comply various standards to ensure accuracy, transparency and consistency in
managing the financial resources.
1.4 Evaluation of systems for managing financial resources in health and social care
Systems are the set policies, rules, programmes, principles and procedures which provide
guidance as well as directions to perform the operations in right direction of any business. For
management of different activities, adequate systems are used for monitoring and evaluating
those operations (Haynes, 2015). In NHS England, systems are required to track and control
activities like medical treatments, financial transactions along with social cares. The evaluation
of system with advantages and disadvantages are as follows:
Costs control and management system: This system helps in identification of associated costs
and management of expenses for achieving profits. It is used in selected firm to predict the future
expenses and formulating plans in advance.
Advantage: It benefits by eliminating the inefficiencies along with tracing the future costs of any
specific product .
Disadvantage: It predicted expenses may not be occur which creates an unfamiliar situation as
well as ineffectiveness in organisation.
An Audit system: such system is used in chosen business to evaluate its abilities for protecting
and disclose the financial as well as non financial information to various users. It helps in
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collecting data, performing ethical procedures, scrutinising the relevant activities to produce the
final reports (Metric Stream, 2019).
Advantage: It benefits by revealing the unnecessary, evaluation of risks, clearly understanding
with monitoring the financial records and fraudulent activities.
Disadvantages: it is very time consuming system and leads to provide negative results in the
auditing.
2.1 Diverse sources from where income may be encountered
In any sector income is plays an important role in achieving the goals of the business.
There are various sources of income available in health and social care sector. Income is required
in any business to fund the daily expenses as well as helps in raising the financial gains in any
accounting period (Horton, and Farnham, 2015). The accountants of NHS England uses the
following sources of income:
 Funding from government: The government of different countries provides funds to
the selected firm to perform its operations of providing services to required people in
health and social care sector.
 Direct sale of products: The chosen business earns funds by providing its products
such as medicines for sale to public or intermediaries. It also earns money through the
medium of return on investments.
 Fees charged: doctors provide their services in return on charging some fees from its
distinct types of clients or customers. These customers are the trustees and
shareholders. This fees act as a source of income.
 Sale of share: the health and social care invests certain portion of revenue in the
security market. By selling the equity in the market too potential investors helps the
managers of determined entity. By selling the shares at premium they obtain the high
incomes.
 Funds from rents: there are various assets which are provided in rents to different
shareholders (Smee, 2016). This helps in upgrading the revenues by renting any assets
by charging high rents.
2.2 Factors which influences the availability of financial resources
The targets and goals of different businesses are different and each business has distinct
service users for the service they provide. All such contributes to the availability of financial
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resources. There are various internal and external factors which influences the availability of
funds in health and social care sector (Hunter, 2018). In NHS England the following factors
influences the availability of financial resources:
 Size of business: Size of an organisation influences the availability of financial resources
to great extent. Different firms operates in different sizes. Some are small where as others
are large. The businesses which have large balance sheets can easily avail the loans at
large amount as compared to small businesses. Large organization provides more services
and more revenues than small firms.
 Reputation: the reputation of any business have the capability to attract and maintain a
position in competitive environment. The selected business has good reputation in the
health and social sector. For it, it is very easy to attract and retain various customers and
investors.
 Geographical location: Location of company is a factor which influences the
availability of financial resources. With the selected firm, the location have diverse
effects for availing the funds.
 Government funding policies: government formulates various policies to grant funds
for providing high quality services to various users. The amount of funding depends from
government to government of different countries (Kelly, 2015). Such factor influences
may increase or decrease the availability of financial resources.
2.3 Different types of budget expenditures
Budget is an estimate of the future expenditures and revenues for an accounting period.
These are the financial statements prepares on the basis of predictions (The Motley Fool, 2019).
They helps in controlling the expenses, guiding in correct directions, planning the future as well
as allocating the cash in different activities. In NHS England, following budgets are used to
control the expenditures:
 Operating budget: such budget helps the organisation to plan day to day as well as
future operations to manage the expenses for the purpose of building reserves of cash and
establishing accountability relationships to achieve the objectives. Such budgets are
prepared considering the associated costs of various operational activities.
 Cash flow budget: this budget is used in chosen firm to project the inflows and outflows
of cash during the financial plan. It examines the factors related to investments made for
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health products, capital received from shareholders, grants from governments and money
paid on maintenance of laboratory equipments (Lewis, 2018). Such budget provides
access related to the availability of cash in the organisation to continue the operations.
 Human resource budget: this budget is helpful in providing the requirements of the
human resources in the selected organisation. It includes the funds allocated to different
human resources practices. Such budget involves the costs associated with training
programmes, selection and recruitment practices and many more.
 Marketing and communication budget: the executives of respective sector uses such
budgeting technique to provide the planning, tracking as well as evaluating the plans to
attract the customers through various means of marketing communication channels. Such
budget helps in formulating the return on investments on the amount spent in informing
the customers.
2.4 Decisions about expenditures are made
Decisions are the choices made in the uncertain circumstances. In any organisation
decisions are taken by the executives along with the managers regarding the expenditures. Proper
analysis is done to reach on some decision. For such, the supervising authority of NHS England
uses various analysis tools to reach on some decision. The techniques includes the SWOT
analysis, Cost benefit analysis and adjusting strategies. Swot analysis helps in identifying the
strengths and weaknesses with the help of internal factors as well as opportunities and threats by
scanning the external environment (Nelson and Staggers, 2016). Cost benefit analysis is used to
evaluate total expenditures, investment returns and risk analysis. Adjusting strategies are used to
adjust the cost of the performance of investments with expenditures incurred. All these analysis
helps in taking corrective decisions for setting the priorities regarding the expenditures. At the
time of formulating the expenditure decisions, the important activities are identifies and priorities
are given to those expenditure which results in more losses. The health and social care focuses
on the expenditures which are based on facts as well as logics. Such sector or organisation have
taken decisions to limit the unnecessary activities which reduces the expenditures such as
payment of dividends to shareholders is eliminated. All these decisions are taken after
considering all internal and external factors which helps in deciding the accountability and
reporting of the expenditures in chosen organisation (Nica, 2015).
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CONCLUSION
From the above discussion, it can be said that proper management of financial resources
in any sector is a crucial function. The principle of data accuracy and transparency of costing and
business control system related to cost accounting system, budgetary control system are
followed. The organisations collects informations from internal and external sources needed to
manage financial resources. Regulatory requirements for managing financial resources are HM
Revenue and Custom, Generally Accepted Accounting Principles and Care Quality Commission.
Costs control and management system and Audit system are used for managing financial
resources. Diverse sources of income are encountered. There are several factors which influences
the availability of financial resources. Types of budget expenditures includes operating budget,
cash flow budget, human resource budget, marketing and communication budget. Decisions
about expenditures are made after evaluation of various analysis within a health and social care
organisation.
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REFERENCES
Books and Journals
Braveman, B., 2016. Leading & managing occupational therapy services: an evidence-based
approach. FA Davis.
Finkler, S. A., Smith, D. L. and Calabrese, T. D., 2018. Financial management for public,
health, and not-for-profit organizations. CQ Press.
Greene, R. R., 2017. Social work with the aged and their families. Routledge.
Haynes, P., 2015. Managing complexity in the public services. Routledge.
Holt-Lunstad, J. and Uchino, B. N., 2015. Social support and health. Health behavior: Theory,
research and practice, pp.183-204.
Horton, S. and Farnham, D. eds., 2015. Public management in Britain. Macmillan International
Higher Education.
Hunter, D. J., 2018. Desperately seeking solutions: rationing health care. Routledge.
Kelly, A., 2015. The enterprise culture and the welfare state: restructuring the management of
the health and personal social services. In Deciphering the Enterprise Culture
(Routledge Revivals) (pp. 146-171). Routledge.
Lewis, J. ed., 2018. Gender, social care and welfare state restructuring in Europe. Routledge.
Nelson, R. and Staggers, N., 2016. Health Informatics-E-Book: An Interprofessional Approach.
Elsevier Health Sciences.
Nica, E., 2015. Moral leadership in health care organizations. American Journal of Medical
Research. 2(2). pp.118-123.
Smee, C., 2016. Speaking Truth to Power: Two decades of analysis in the Department of Health.
CRC Press.
Sommers, B. D., Gawande, A. A. and Baicker, K., 2017. Health insurance coverage and health—
what the recent evidence tells us.
Zhao, J., Wang, T. and Fan, X., 2015. Patient value co-creation in online health communities:
social identity effects on customer knowledge contributions and membership
continuance intentions in online health communities. Journal of Service Management.
26(1). pp.72-96.
Online
The Motley Fool. 2019. [Online]. Available through: <https://www.fool.com/knowledge-
center/what-is-a-hard-inquiry.aspx>.
Metric Stream. 2019. [Online]. Available through:
<https://www.metricstream.com/solutions/audit-management.htm>.
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