Managing Financial Resources in Health and Social Care - Assignment

Managing Financial
Resources in Health and
Social Care

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Principles for costing and business control system...............................................................1
1.2 Informations needed in financial resource management.......................................................2
1.3 Regulatory requirements of financial resource management................................................2
1.4 Evaluation of system of financial resource management......................................................3
2.1 Diverse source of income of Health care service providers..................................................3
2.2 Factors influencing availability of financial resources.........................................................4
2.3 Different types of budgetary expenditures............................................................................5
2.4 Evaluation of decisions for expenditure in CareTech plc.....................................................5
3.1 Management of financial shortfalls.......................................................................................6
3.2 Action to be taken in case of suspection of fraud.................................................................6
3.3 Evaluation of budget monitoring arrangements....................................................................6
TASK 2............................................................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Inclusion of an effective management of financial resources can help the health and
social care organisation in results in management of smooth flow of finance in the company.
CareTech plc is a London based company which is engaged in providing social care services to
children and adults. The study includes brief summary of all the costing principles, regulatory
requirements, management and need of financial resources, various sources of income, and
various budget expenditures. It also includes decision making process about expenditures,
management of financial shortfalls, and action to be taken for suspecting fraud. Further the study
shows a presentation of required informations in decision making process, relationship between
health and social services, cost and expenditure and impact of financial consideration upon its
customers along with some suggestions as to improve it financial system.
TASK 1
1.1 Principles for costing and business control system
Principles of Costing
Costing is a process of determining cost incurred by each department of company and
total cost of the business in a particular time. There are some principles that need to be followed
by CareTech plc to involve effective cost control in organisation like:
 Consistency: Business should maintain a consistent method of costing in order to
maintain the accuracy and transparency in costing system.
 Data accuracy : CareTech plc should include accurate data in calculation procedure for
getting actual results from it.
 Materiality : costing report should include cost incurred in all material activities of
CareTech plc.
Principles of business control
Inclusion of business control system leads in monitoring all the activities of company and
detection of inaccuracy (Martinez-Sanchez, Kromann and Astrup, 2015). Main business control
systems which could provide better business control to CareTech plc are:
 Budgetary control: inclusion of this system helps in predetermination of cost and profit
of the company. It can help CareTech plc in tracking business position and setting short
term goals.
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 Personal control: This system avoids high labour turnover in CareTech plc. In provides
control over human resource management.
 Audit control: it leads in detection of error in overall business and help in enhancing
accuracy in the business.
1.2 Informations needed in financial resource management
All the informations related to Financial resources can be gathered from balance sheet,
cash-flow and income statements. For better management of financial resources, CareTech plc
plc. need to get numerous informations like amount of total assets and liabilities, total
expenditure incurred by it and all the gains of it within a specific time. With the help of all these
statements, company can gather all the relevant information which are needed for the financial
resources management.
Balance sheets of CareTech plc shows its actual financial position. It provides actual
amount of assets and liabilities held by the company (Fisher, 2017). Income statement provides
information about profit or loss gained by CareTech plc within particular time. Further, it also
shows all the incomes and expenditures incurred by it in particular time. Cash-flow statement of
the company helps in providing information regarding sources of inflows and outflows in the
company and efficiency of business in maintain of flow of cash within the organisation.
1.3 Regulatory requirements of financial resource management
Law has provided some rules which have to be followed by CareTech plc while
performing activities regarding management of financial resources. Application of these
activities prevent company from happening of any financial crime and enhances the honesty of
employees regarding financial resources of company (Ferry and Eckersley, 2015). Being a
company relating to health and social care activities, CareTech plc plc need to follow following
regulations:
 Preparation of proper financial statements: CareTech plc plc need to prepare all the
financial statements as per the requirements provided by the financial reporting council.
 Maintain quality and safety in providing services : Quality of all the services provided
by CareTech plc need to b e as per the Health and safety regulations.
 Pay appropriate amount of tax : All the incomes earned by CareTech plc need to be
shown properly and calculation of tax amount should be done properly as well.
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 Monitor all the licensing requirements : Being a health and care services providing
company, CareTech plc need to comply with all the licensing requirements as per the
rules provided by Monitor 2014.
All these legal requirements are needed to be adopted by Care Tech. In compliance of any of
these activity can lead in implication of legal proceedings over the company. It directly effects
the reputation of the CareTech in the competitive market.
1.4 Evaluation of system of financial resource management
System can be defined as combination of procedure, principles and policies of a
company. By adopting an appropriate system in the organisation, CareTech can built a strong
management of all the activities of the company.
Financial resource management system includes system of preparation of costing control
system, auditing system, budgetary system, financial accounting system, etc. by managing these
systems, CareTech can have better control over overall financial management system of the
company.
 Cost controlling system: it includes management of cost total incurred by the company.
It provides evaluation of cost incurred by each department (Turner, 2016). It helps in
controlling the cost wastage in organisation.
 Auditing system: With the help of appropriate auditing system, CareTech plc can detect
all the inaccuracy and frauds in it.
 Budgetary control : inclusion of proper budgetary control system leads in proper setting
of goals for the company. It enhances the growth of company as well.
 Financial accounting system : proper financial accounting system prevents CareTech
plc from inaccuracy in the financial resources. It helps in determining actual financial
states of organisation.
Hence, it can be evaluated that all the above system helps CareTech plc in proper management of
all the financial resources.
2.1 Diverse source of income of Health care service providers
For the purpose of smooth running of any business, sources of incomes are the most
important element. For CareTech plc, being a health care service provider company, it has
following sources of income:
Consumers:
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Consumers are the most important source of income. Company provides health care services to
its client and takes money in return (Herson, 2016). It can be treated as a key sources of income.
Investment
Another major income of CareTech plc is income generated by from the getting interest
from the investment of extra available cash with the company.
Sale of shares:
In addition, CareTech being a public limited health care organisation can also get income
from selling of shares to the public and making them members of it.
In this regard, company can gain income from these sources and prevent itself from
financial insufficiency. It helps CareTech plc in smooth running of the business activities.
2.2 Factors influencing availability of financial resources
There are many resources which influences the availability of financial resources in the
CareTech plc like:
 Goodwill : goodwill is the most important which have influence over the availability of
resources. It directly influences the number of customers of company, which effects the
amount of income gained by it.
 Solvency : it shows the capability of company in paying its debts. High level of solvency
helps the CareTech in grabbing funds from outsiders for running its normal course of
business activities.
 Government policy: policy framed by government also effects the amount that could be
taken by the company on credit (Simonet, 2015). Government have power to rise or
reduce the fund that can be risen by CareTech being a Heath care service provider
company from financial resources.
 Quality of services : it effects the attraction of clients towards the company's services
which directly influences the gaining of finance from them.
 Business structure : It also effects the financial resources of company. For example, a
government company or public company may find it easier to rise fund from the public.
On the other hand, it is quite difficult for a private company to rise the funds.
In this way, it can be analysed that there are many factors which influences the availability of
financial resources in an organisation.
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2.3 Different types of budgetary expenditures
Budget
Budgets can be defined an estimation of total income and expenditure which would by
incurred in an organisation in a specific time period. For providing growth to a business,
CareTech plc need to frame budget time to time. It helps the business in tracking its level of
efficiency as well.
There are various types of budgets for the preparation of which health and care service
provider companies need to incur budgetary expenditure like:
 Operations budget : it shows a prediction regarding overall financial activities of a
business. It helps in predicting the future expenses and incomes of the business.
 Cash budget : it includes prediction regarding flow of cash in the overall business of the
CareTech plc (Ferguson, Bender and Thompson, 2018). With the help of this budget,
company can also detect the sources of funds in the organisation.
 Human resource budget : it detects the cost to be incurred by CareTech plc in providing
salaries to employees. Further, cost to be incurred in order to conduct training programs
for their development.
 Overheads budgets : this type of budget helps CareTech in estimating the total amount
of expenditure which need to be incurred by it in near future.
2.4 Evaluation of decisions for expenditure in CareTech plc
A company need to critically evaluate all the pros and cons of the investment before
expending any amount on it. This evaluation of expenditure prevents CareTech from suffering
any loss from the investments. Further, it also helps the company in earning maximum amount of
benefits form it.
CareTech plc, need to analyse the cost benefits of the investment before taking any
expenditure decisions. It helps the company in becoming more cost effective. Further, decision
of expenditure also should be taken being unbiased. It helps the organisation in taking the best
decision for expenditure purpose and enhances the earning capacity of the company as well.
In addition, managers of CareTech should also examine whether the investment to be
made by the company is as per the organisational goals or not (Ginter, Duncan and Swayne,
2018). Investing money as per organisational goals of company helps it in better achieving its
goals as well.
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If company makes the decisions before evaluating it properly as above, it could lead in
taking the best investment decision for the company and will enhance its profitability as well.
3.1 Management of financial shortfalls
Financial shortfalls can be defined as insufficiency of financial resources in an
organisation. It results in hurdling the performing normal course of business activities. It may
result in suffering loss from the business. Further, it also results in inability of the business in
paying its debts.
It is a key activity of managers of CareTech plc to maintain flow of financial resources
within the organisation and eliminate the insufficiency within the company. For this purpose,
they need to frame proper policies for financial resources of the organisation.
For the management of financial resources, financial managers can frame many policies
like, proper evaluation of investment projects before taking investment decisions, preparation of
appropriate financial budget and cash budgets and analyse them properly (Schaffer, 2016).
Further, by maintaining funds as per the budgeted expenditure and cash outflows, will also help
in effective management of financial shortfalls.
3.2 Action to be taken in case of suspection of fraud
Fraud can be termed as mistreatment of the position by a person, which is against the
rules and resulted in false presentation of information of the company. In CareTech plc, fraud
can be conducted in various forms like, stealing assets, inaccuracy in entering data into the
financial statements, misrepresentation of license of the company, etc. fraudulent activities can
be detected in auditing procedures. Or while analysing business activities by the managers of
company.
In case any of these frauds or any other frauds detected by the CareTech plc, it can
conduct an in-depth inquiry about the fraud, in case any member of company suspected as a
fraudulent person, it can impose some penalties over the person (Kirby, Pinch and Knox, 2017).
The organisation can also suspend the person or demote the position in the company as well. In
addition, company can also report about the fraud in government authorities like police, CBI, or
Tax department, in order to conduct further inquiry about the fraud.
3.3 Evaluation of budget monitoring arrangements
Budget
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Budget helps the CareTech in estimating the future expenses, incomes and profits of the
company. It helps managers in maintaining smoothness in the overall activities of within the
organisation.
Budget monitoring
In budget monitoring process, CareTech analyses the budgeted or planned performance
of the company with the actual performance. This process helps the managers of company in
detecting the efficiency in the overall performance of it. Further, they can also easily identify the
areas of inefficiency with the help of which they can develop appropruiate strategies and plans
for the business.
In this procedure, managers of Care Tech plc first analyses the budgetary reports
thoroughly. Further, they evaluate the actual performance of the company with the help of
financial statements of the company (Furlong, 2017). In the next stage, they compare the actual
position of the company with the planned one. Through this comparison, they effectively find the
areas of inefficiency. Which helps them in development of appropriate strategies and plans and
also taking decisions for eliminating inefficiency from the business.
In this way, budget monitoring system helps the CareTech in eliminating the inefficiency
from the whole business and enhancing the efficiency of company as well. It provides smooth
growth to the business as well.
TASK 2
Covered in ppt
CONCLUSION
Hereby it can be concluded that managing financial resources in health and social care is
of utmost crucial for providing competent services. The costs and expenditures incurred on
services are significant as customer has to bear services including high prices to be paid by him,
if services are priced high. On the other side, keeping track of various information of patients is
important as well in order to record data quite effectually. This helps to quickly make decisions
by the management as transparency is met. Moreover, by deploying more advanced equipments
and technologies, Care Tech Plc may effectively attain higher productivity in serving its patients.
Thus, financial resources are immensely important to get managed for elevating efficiency and
firm's performance.
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REFERENCES
Books and Journals
Ferguson, K. M., Bender, K. and Thompson, S. J., 2018. Risk and resilience factors associated
with formal and informal income generation among homeless young adults in three US
cities. Youth & Society. 50(3). pp.351-376.
Ferry, L. and Eckersley, P., 2015. Budgeting and governing for deficit reduction in the UK
public sector: act three ‘accountability and audit arrangements’. Public Money &
Management. 35(3). pp.203-210.
Fisher, G. and et.al., 2017. We examine how entrepreneurs manage new venture legitimacy
judgments across diverse audiences, so as to appear legitimate to the different audience
groups that provide much needed financial resources for venture survival and growth. To
do so, we first identify and describe the different mechanisms by which entrepreneurs can
establish new venture legitimacy across diverse audiences. We then account... Journal of
Business Venturing. 32(1). pp.128-129.
Furlong, C. and et.al., 2017. Risk management, financial evaluation and funding for wastewater
and stormwater reuse projects. Journal of environmental management. 191. pp.83-95.
Ginter, P. M., Duncan, W. J. and Swayne, L. E., 2018. The strategic management of health care
organizations. John Wiley & Sons.
Herson, J., 2016. Strategies for dealing with fraud in clinical trials. International journal of
clinical oncology. 21(1). pp.22-27.
Kirby, A., Pinch, S. and Knox, P., 2017. Public service provision and urban development.
Routledge.
Martinez-Sanchez, V., Kromann, M. A. and Astrup, T. F., 2015. Life cycle costing of waste
management systems: Overview, calculation principles and case studies. Waste
management. 36. pp.343-355.
Schaffer, S. K. and et.al., 2016. Opportunity costs and local health service spending decisions: a
qualitative study from Wales. BMC health services research. 16(1). p.103.
Simonet, D., 2015. The new public management theory in the British health care system: a
critical review. Administration & Society. 47(7). pp.802-826.
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Turner, R., 2016. Gower handbook of project management. Routledge.
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