Financial Management in Care Homes

This assignment delves into the crucial aspect of financial management within care homes. It analyzes various budget systems used for effective financial planning and resource allocation. The case study of Silloth Nursing and Residential Care Home highlights the need for sufficient funding to deliver quality services. The assignment further examines factors influencing financial resources, such as costs, expenditures, economic conditions, and types of services offered.

MFRD

Table of Contents
INTRODUCTION.....................................................................................................................................3
Part 1.....................................................................................................................................................3
1.1 Explanation of the principles of costing and business control systems......................................3
1.2 Identification of information needed to manage financial resources.........................................4
1.3 Explanation of regulatory requirement for managing financial resources..................................4
1.4 Evaluation of the system for managing financial resources in the health and care organisation
..........................................................................................................................................................5
2.1 Discussion on the various sources of income.............................................................................6
2.2 Components that can influence the income of the organisation................................................6
2.3 Explanation of various budget expenditures..............................................................................7
2.4 Evaluation of the approaches that may be used at various levels of the develop and promote
effective team working.....................................................................................................................8
PART 2...................................................................................................................................................8
a).......................................................................................................................................................8
3.1 Management of financial shortfalls............................................................................................8
3.2 What kind of action can be taken in the event of suspected fraud............................................8
3.3 Budget monitoring system..........................................................................................................9
4.1 Sources of information...............................................................................................................9
4.2 Analysis of the relationship between cost and expenditures.....................................................9
4.3 Evaluation of financial considerations impact upon a service upon a service users.................10
4.4 Improvement of the company expenditures............................................................................10
CONCLUSIONS.....................................................................................................................................10

INTRODUCTION
In every business organisation, finance is very essential part through which business
Activities and function carried out. In the absence of proper finance, corporation cannot
survive its business operation. Financial management is a combination of various functions
such as planning, directing, organising and controlling of various financial activities. In order
to manage the financial activities, finance manager is highly responsible to carried out the
practices and planning of finance (Abraham, Deo and Irvine, 2008). The major objective of
financial management is to supply maximum return to the owner to the corporation on its
investment. The following project report provides the depth understanding about the financial
management and also provides the knowledge of how to use the financial in the business
organisation so as desired objective can attain within a specific time as well as by sufficient
financial resources. In addition to this, various principles of costing and business control
system has also addressed in this report. Furthermore, various kinds of budget expenditure
and their evaluation has also discussed in the project. In this diverse source of income that
may be encountered in health and social carte organisation has also studied. The major
objective of this report is to understand the financial management in the context of Silloth
Nursing and Residential care home.
Part 1
a)
1.1 Explanation of the principles of costing and business control systems
Silloth Nursing and Residential care home is a nursing of the charity which is
developed to the management committee which can have 16 members. The major objective
of charity as set out its trust deed are that the home should be used for the purpose of a
sanatorium for the use of the native of either of the former countries of Cumberland and
Westmorland and other. The Silloth have main aim is to providing post operative
convalescence, short and long stay nursing and residential care. In order to attain this
objective, faineance manager should have consider the various activities and practices of
fiancé through which it can survive smooth functioning. In this manner, management of cost
and budgeting is very important (Bachelier, 2011) The cost principle is one of the basis
underlying guideline in accounting. It is also known as the historical cost principle. In other
word it can be said that the accounting guideline requiring in the account and on the financial
statement to be the actual cost rather than the current value. There are four major fundamental
principles of costing which have to consider by the finance manager of the Sillloth Nursing
and Residential acre home. These principles are as follows- Cost is always related to its cause- According to this principle, the figure of costs are
collected and analysed according to the nature and are allocated on the basis of cause
relationship. Abnormal costs are charged in costing- A cost incurred to meet the loss by fire, riot
and theft is known as abnormal cost. This cost is not charged to production as it has

nothing to do with production part. The normal cost incidental to production or
service is charged to cost canters and not the abnormal ones. Cost is charged after it is incurred- If the cost incurred then it is considered no cost
and it can not charged to a cost centre. For example, if normal loss or wastage is to be
borne by that unit only where loss has incurred (Baker and Powell, 2009) Such kind
of loss is not imposed on those units which are yet to pass or which are yet to come
for production.
 Keeping of account for cost is also based on double entry principles- The cost
ledger and other cost control accounts are kept on the double entry principles. The
same principles is also adopted in financial accounting.
Business control system
Business control system is a procedure designed and established to check, record, regulate,
supervise, authenticate and restrict, the access to an assets, resources or system. In a simple
word it can be said that it is a system which gathers and uses information to evaluate the
performance of various organisational resources like human, physical, and financial and also
the corporation as a whole in light of the business strategies pursued. Business control system
is a technique to assist management for steering an organisational towards its strategic
objectives and competitive advantages.
1.2 Identification of information needed to manage financial resources
In order to manage the financial resources, there is very essential to acquire and collect the
information in the organisation. Financial management is more than keeping accounting
records. It is an essential part of the organisational management and cannot seen as a separate
task to be left to finance staff or the honorary treasure.(Bennouna and et.al., 2010) The
information required in the management of financial resources culminates from the
corporation meeting its requirements. Organisational requirement vary from operational
activities like auditing. These organisational activities determines the allocation of financial
resources for their completions. This kinds of data will be acquired through resultant figures
from the inventories maintained by an organisation for instance budget, financial statements,
operational activities, income statements, cash books and other cost activities within the
organisation. Corporation get their information maintains information such as human capital,
working capital and debts.
1.3 Explanation of regulatory requirement for managing financial resources
In every business organisation, there are some kinds of regulatory body which
corporation have to adopt their rules and regulations. These regulatory must apply for
guarantee the success of that company. This is very important regulatory body in UK which
force all health care settings to provide quality, effective and compassionate health services
and ensure that there is constant improvement in healthy care services delivery. It monitors
the operation of health and social care setting and regulate the quality of their services.
Following are some regulatory body which provide the protection and security to the services
and practices of healt care organisation-

 NHS Commission board- It is most effective and significant regulatory body which
assist health acre setting in developing financial plan, Budget and management of
operating activities. This ensures that the financial resources are used according to the
financial plan so there is impressive financial control as set out the health care act.
 GAAP- It is an important regulatory body which needed the corporation to use
accounting principle which are used in the preparation of accounting records. This
regulatory system ensure that the financial statement are made in accordance with the
law and they can easily understood by all the user who are not financial experts.
 Health care sector- It is also very important regulatory body which monitor the
functions of health and social care setting.(Brigham and Ehrhardt, 2013) This ensure
that the he;lath care providers are very honest and transparent on their responsibility
and duty and follow entire rules and obligation according to their duties. This is
important in establishing high level of transparency and accountability in the
management of health and care financial resources.
 Care standard Act 2000- It is another important regulatory body which place
responsibility on establishment to carry out proper care to maintain financial of
business.
1.4 Evaluation of the system for managing financial resources in the health and care
organisation
In the Silloth Nursing and residential care home, there are various system used ion
order to manage the financial resources which aid in determine the cost implication of what
are required to be done and then how to source for funding as well as carrying out budgeting
to determine which fund goes where and to be this effectively use of balance sheet come in
handy. In this manner financial management is an efficient use of the financial resources to
meet the stated objective of the care home. It involve the use of various techniques and
procedures that authorizes the control, distributions and investment of scares resources of the
corporation to produce the return. Financial systems are very important in generating current
financial position of the corporation. This is through the use accounting procedure and
principles which are used in the preparation of accounting records,In this manner, the
accounting systems such as automated management systems ensures that the corporation
receives instantaneous feedback. This overcome the error which could have been reflected in
the financial statements (Keller, 2013). Balance sheet is the financial statement of the
organisation at a given point in item and this is based on a simple equation which is assets is
equal to liabilities plus owners equity. It is also a frame work for keeping track of medium of
exchange as it flows in and out of the company. Balance sheet also provides a summary of
what the corporation's own at a given time point in time. An organisation assets its belong to
the company while liabilities is what the company owns at a particular date, balance sheet
analyse and expatiate on how the company is being funded and how those are being used.
The financial resource management system also is significant in producing accurate financial
report which represent true states of fairs and therefore the users of the financial statements
can rely on them for decision making.
b)

2.1 Discussion on the various sources of income
In the context of Silloth Care home there are require a various effective sources of finance
through which it can survive its business activities and functions. There are various sources
of finance which can used by cited care home. These sources are as follows-
 Government funding- Generate the finance by the government is the effective source
of funding through which care home can get support of social services. The local and
national government can allocate funds to the care organisation to enhance the
provision of health services. This financial resource can be used to finance different
health projects and render other general health services.
 Private health insurance- In this source of finance, corporation allow the service users
yo get the medical services which are paid by the insurance companies. This therefore
act as a very important source of incomes since the insurance corporation pays the
services offered by the organisation (Ball, Jayaraman and Shivakumar, 2012).
 Sales of drugs and other health care facilities- The organisation can arise revenue by
selling health care facilities to various health acre setting and clinics in the country. If
organisation sell out the various infrastructure and equipment related to the health
services to other organisation then it can easily generate the large amount of fund.
These funds can be used as a source of income to pay operating expenses, buy health
acre equipments and other health acre facilities.
 Voluntary organisation- Some organisations such as charities can provide funds to the
corporation in the form of donors to finance other health care projects. These kinds of
organisation is working for the society so this fund can be used as a source of income
to pay operating expenses, buy health acre equipments and other health acre facilities.
2.2 Components that can influence the income of the organisation
Financial management in the organisation is very important through which
corporation can easily cope up with the changes in the budget in the future as well as manage
the various financial requirement in existing business. There are various kinds of components
that can affect the income and financial resource of the Silloth Nursing and residential care
home. These factors are as follows-
1. Types of services or products provided buy the organisation-In the context of Silloth
Nursing and residential care home, the types of services largely affect the financial
resources of the organisation.
2. Economic condition- This factor largely affect the organisation financial status
because according to the country income, business financial and revenue will generate
so economic condition is very important components for the organisation.
3. Central government allocation- The allocation of more financial resources increases
the income of the organisation. This makes it to produce quality services since it has
high income. On the other hand political sensitivity also influence the amount of
money the corporation receives as income (Baker and Powell, 2009)

4. Expenditure- This is the amount which spend on the product and services. It is also
the act of spending money on the various business activities and function. So it can
said that financial resources largely depends upon the expenditure of the organisation.
If there is large number of expenditure then it negatively affect the financial resources
of the firm.
5. Change in regulation- If any kinds of fluctuation occurs of the regulation of the
government this might affect the availability of the financial resources.
6. Income- This is another important factor which affect the financial resources of the
cited care home. The income of the home might be influenced in certain area.
7. Ability to negotiate regional allocation- When the corporation has the ability to
negotiate effectively for regional allocation of funds, it will receive high allocation
which increases its income annually.
2.3 Explanation of various budget expenditures
In every business organisation, proper budget system is very important which aid in
predict how much money company is going to spend in specific areas of business activities.
The system control expenditure limits the difference and requires an authorization. In the
context of Silloth Nursing and residential care home, there are various kinds of budgets in
order to maintain the financial resources and develop a systematic record system. These
budgets are as follows-
 Operating expenditure budget- Operating expenses budget is a revenue which is
calculated by probable income and expenses for a set of time. It is very significant
type of budget expenditure which ensures that all the service providers of this care
home are remunerated and receives various rewards which motivate them. The
operational budget covers revenue and sales surrounding the day to day core business
of the organisation.
 Capital expenditure budget- A capital expenditure budget is an outlay of cash for a
project expected to formulate a cash inflow over a time. In other word it can be said
that capital expenditure are the fund that a business uses to by major physical products
and services to enhance the corporation abilities to generates revenue.
 Marketing expenditure budget- The organisation must prepare a budget on how it is
planning to spend its financial resources during the marketing.
 Sales budget- A sales budget is a plan of the business which estimate the sales in units
as well as the estimated earnings from these sales. In the absence of sales budget
company can not track processes or improve performance (Brigham and Ehrhardt,
2013). Management often utilise employees in different department to aid with the
sales and review estimate. For instance, management will most likely consult with the
sales department or salesmen to establish a reasonable sales objective for the future
year.

2.4 Evaluation of the approaches that may be used at various levels of the develop and
promote effective team working
The decision about the company expenditure is very important which determine what the
corporation should purchase or not in the future. The availability of financial resources affect
the ability of organisation to acquire health care resources. It is very important decision to
related to financial allocation and expenses in the business activities and function (Chapra,
2011). The fund available is allocated according to priority in the budget so that most
important expenditure are made to provide efficient health services to customers with little
resources. There are various kinds of decision at various level of the organisation. These
decision s are as follows-
 Demand on services- It is very important decision which is directly related to the
expenditure according to the demand of services. The services in the health care
organisation, which are high demand have the high demand should use higher
expenditure since there is required for high financial resources. This ensures that thee
is quality health services when there are enough health acre facilities and equipment
to increase the quality services demanded.
 Central government guidance- This is also important decision regarding to the
expenditure is also affected by the guideline by central government so that
corporation can meet the principle of regulatory bodies.
PART 2
a)
3.1 Management of financial shortfalls.
Financial shortfall refers to as a situation in which real amount at hand to spend is less
than expected or required and it could also the amount by which a supply fall short of
expected need or demand or amount by which capital required. In order to manage the
financial shortfall, company requires a qualified and knowledgeable persons who are able to
devote their time. In addition to this there requires a regular meeting through which they can
easily discussed on the financial issue which are occurred at the organisation. In addition to
this , it is easier to forecast expenditure than income then it is important projections which
includes liabilities and contingencies (Chen, 2012) Furthermore, by taking professional
advice also aid to the management in order to manage the finance at the organisation. The
organisation should also ensure that there is proper management of the budget deficits and
shortlist. With assistance of the proper management of finance shortfall can easily remove \
from the organisation. This aid in attaining by operating within the budget so that there is no
over or under expenditure This will makes the corporation to buy all the capital and operating
expenditure within the budget. The shortfall can also managed by sourcing for additional
financing from local stable financial institution.
3.2 What kind of action can be taken in the event of suspected fraud
Fraud is a situation or any act under which individual is cheated by someone. In the
context of finance, the fraud is represented by changing of financial statement and condition

by either the manager or any other staff who are working in the organisation. In other word it
can be said that if the person misrepresent the actual data or finance in the financial statement
and balance sheet ten it is known as the fraud in the context of financial management. In
order to overcome this kind of cation in the organisation, management can take the various
kinds of action which are as follows-
 In the fraud case, the suspected fraud should report to the person in charge of the
department where the suspected fraud is noticed immediately
 In preventing fraud the management should have a sound system and internal control.
 There should be develop a prop[er policy and practices through which fraud kinds of
activities can not occurs at the workplace. In addition to this suspected fraud will lend
themselves to automatic reporting to the police such as theft by third party.
3.3 Budget monitoring system
In the health and social care organisation, it is very important to monitor the financial
resources and activities so as fraud kind of activities can not occur. It should ensure that it
conduct both internal and external audit to render the corporation with an opportunity to
develop its books in accordance with the law (Ittelson, R 2009). Internal audit is done by the
year and it asses if corporation formulate its book can render a true and fair view of the
organisation states of affair.
In order to overcome the financial fraud, company should adopt the effective
monitoring and audit through which all activities can take place in a fair manner. In addition
to this corporation can also employ an external auditor to monitor the organisation
expenditure and income. This is able to reveal financial misuse and intentional mistakes
which reduce financial performance of the organisation.
b)
4.1 Sources of information
In order to take effective decision for the business activities and function, sufficient
information is very important. Effective decision making can able completed without proper
information. The information required will enable for company to set and mange budget
effectively, make effective, costing and pricing decision (Keller, 2013). The cited care home
can use the management accounts to identify the lapses where the financial properties have
bee taking place. With assistance of the result of internal and external audit, firm can take
adequate information which acts as evidence that there is a financial fraud which the
management committed.
4.2 Analysis of the relationship between cost and expenditures
In the context of care organisation, services delivered to the service users depends on how the
home is being managed, putting into consideration the people company have in the home.
There is very close relationship between the service deliver, cost and expenditure. If care
provide deliver the quality services to patients then it involve the various expenditure along
with activities and actions in the organisation (Kitchen and Confetto, 2010). If corporation
purchase the equipment in order to deliver the services to patients them they have to pay

some kind of cost. The expenditure of health acre setting should be done in compliance with
some legal framework which render guideline on how the organisation should spend its fund.
4.3 Evaluation of financial considerations impact upon a service upon a service users
The increase of the financial resource in the organisation enhance the quality of
service delivered to users. The quality of service to be given depends on the finance available
to the clients, a quality acre and service supposed to be given to the service users but in a
situation whereby they can not afford the bill this will influence them emotionally.
Financial consideration is very important in the organisation, if company have large
number of finance then it can able to improve the quality of services and facilities in the care
services,.It can more add the equipment and machinery in the organisation , then service
provider can deliver the high quality of services to patients (Lampe and Hofmann, 2013). The
increase of financial resources in the organisation enhance the quality of service deliver to the
patients. This is because high financial consideration is able to pay for quality health acre
facilities. In the organisation if there is high financial consideration then it will able to pay
high salary to its staff members who can able to deliver high quality of services to patients. It
also affect the good will and productivity of the care organisation in the market.
4.4 Improvement of the company expenditures
In the organisation it is require to improve the expenditure capacity. It has to reassess
its expenditure so that corporation can overcome its expenditures and increase its
expenditure. Before spending the funds company should be assessment of the value of money
so that the purchase of any assess and payment of an operating expenses matches with the
value of the items of expenditure (Siano, Kitchen and Confetto, 2010). Corporation should
prepare the systematic planning for allotment of finance on the various business activities so
as it can improve its operational item overcome its extra expenditure.
CONCLUSIONS
Financial management is a process of planning, organising, monitoring of financial
activities and functions in the organisation. From this project report it has been concluded
that there are various budget system in the organisation through which finance can effectively
managed. In addition to this, it has effectively discussed that in the Silloth Nursing and
residential care home there is highly required a sufficient fund so as it can successfully carry
out its business activities and functions. It has also concluded that there is various factors
which affect the financial resources of the business enterprise. These factors are cost,
expenditure, economic condition, types of services.

REFERENCES
11

12