Managing Financial Resources in HSC

Managing Financial Resources
in HSC

TABLE OF CONTENTS
TASK 1......................................................................................................................................3
Introduction................................................................................................................................3
Principle of costing and business control system...................................................................3
Information needed to manage financial resources................................................................4
Regulatory requirements for managing the financial resources.............................................5
Evaluation for managing financial resources in HSC............................................................5
Conclusion..................................................................................................................................6
TASK 2......................................................................................................................................6
Diverse sources of income that may be encountered in health and social care......................6
Factors that influence the availability of financial resources in health and social care
organizations..........................................................................................................................7
Different types of budget expenditure incurred in health and social care organizations.......7
Evaluating the way under which decisions about expenditure are made within a health or
social care organization..........................................................................................................8
TASK 3......................................................................................................................................8
Managing the budget shortfalls..............................................................................................8
Actions to be taken in the event of suspected fraud...............................................................9
Budget monitoring arrangements ........................................................................................10
TASK 4....................................................................................................................................10
Identifying the information required to make financial decision relating to health and social
care services.........................................................................................................................10
Analysing the relationship between health and social care service delivered, costs and
expenditures..........................................................................................................................11
Impact of financial consideration upon an individual..........................................................12
Suggest ways to improve the social and health care services..............................................12
REFERENCES.........................................................................................................................13

TASK 1
Introduction
Finance is the most important part of business without which it is not possible to run
the business activities as there are lot of daily expenses to be incurred which requires liquid
funds. It is respective of the fact whether business is related to product or service or is related
to the Health and Social Care. This report presents about the principles of costing, business
control systems and what sort of information required to manage the financial resources. It
also includes regulatory requirements and system for effectively managing the resources in
HSC.
Principle of costing and business control system
Principle of costing
It is important to gain and understand the concept and the principles of costing which
helps in executing the organization’s objectives effectively. There are six principles of
costing approved by NHS are stated below.
Stakeholder’s engagement: It mainly involves internal and external parties having
interest in the business. In HSC the main stakeholders are the carers, consultants, nursing
staff, operational staff and the public having some interest in the organization. Therefore,
engaging them in the defining and determining the costs will be appropriate.
Transparency: It explains the costing procedures clearly and understandable manner.
It involves properly recording all the activities incurred in patient care (Wright and et.al,
2017). It incudes data source documents, cause-effect relationship in between the resource
costs and activities. Transparency helps the HSC in preparing their financial statements in a
better way presenting the true and fair view of the financial performance of the business.
Materiality: It is mainly focussed on setting the benchmark which helps in making
sure that amount less than it is price insignificant. It should focus on the material cost and
activities having an influence over the organization and required to be taken into account.
Causality and objectivity: Under this principle, costing is done based on the
understanding of how the resources are being utilized while taking care of the patient and the
way for minimizing it. It focuses on effectively measuring the cost associated with the
operation.
Consistency: It puts pressure on the organization in using simple concepts every year
and should not change the procedure every year and should promote consistency as it helps in
better evaluation of outcomes and in comparing the result with the previous year as well.
Data accuracy: This principle emphasizes on the fact that the business organization is
required to provide accurate information to an individual.
Business control system
Management control system
It is the control system which helps the management in exercising control over the
organizations precious resources with the objective of fulfilling the organization’s goals and
targets (Lowe, 2019). It includes resources such as human resource, financial resources etc.

which are required to be controlled for the effective management of the organization’s
resources with the help of various management tools such as performance planning of the
employees, raw material allocation etc.
Procurement procedure
The procurement procedure is the mechanism with which the buyer purchases the
products in a systematic manner by following a certain way. It involves searching for the
supplier or bidding for acquiring that product. It includes the following steps:
 Evaluating the need of the business
 Searching for the supplier
 Fixing the price of the product in case of bidding/auctioning
 Closing the deal
Information needed to manage financial resources
For effectively managing the business activities, managing the financial resources is
very important. Following are the information which is required for managing the financial
resources.
Income statement
This statement depicts the profits and loss incurred over a period of time. It includes
the list of all expenses incurred in that period both operating and non-operating (Parnell,
Stone and Aravopoulou, 2018). Organization can use this statement to analyse the income
from various sources and expenditure as well.
Balance sheet
The management of the organization mainly utilizes the balance sheet for gathering
information about the assets owned by the organization during a financial year against the
liabilities it is holding. It will help in analysing the liquidity position which is very useful for
effectively running the business on a daily basis.
Cash flow statement
The cash flow statement will help in determining the cash flow from different sources,
which is, operating, investing and financing activities. It also assists the management in
identifying the changes in its working capital.
Report of external auditors
Based on the financial statements, external auditors prepare the financial report in
order to know the financial position of the business which helps in managing the financial
resources effectively.
Calculation of the cost of one resident per month
Amount in £
Average variable cost 600/month
Fixed cost 300000/year
Number of beds 65