Designing a Management Accounting System for New Hospitals

This report explores the contribution of management accounting to the design and operation of new management accounting systems for a new hospital. It emphasizes the importance of an effective management accounting system in the service industry, particularly in hospitals, highlighting the need for coordination among departments and proper inventory management. The report suggests implementing tools like Just-in-Time policy, Economic Order Quantity, and ABC analysis for inventory control, along with ensuring dual approval for major expenses to prevent errors and fraud. Budgetary control is also recommended to maintain control over expenses, enabling trend analysis and forecasting. Furthermore, the report stresses the significance of cost analysis for profitability assessment and report analysis for strategic decision-making, concluding that a well-implemented management accounting system is crucial for informed and economical decisions in the hospital's best interest.

Topic – Management Accounting System
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Table of Contents
Task 1...............................................................................................................................................3
Write a report explaining how the management accountant would contribute to the design and
operation of the new management accounting systems for the new hospital..............................3
Introduction..................................................................................................................................3
Method to implement management accounting system in a hospital..........................................3
Conclusion...................................................................................................................................4
References........................................................................................................................................5
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Task 1
Write a report explaining how the management accountant would contribute to the
design and operation of the new management accounting systems for the new
hospital.
Report
Introduction
Designing an appropriate management accounting system is very crucial for every
industry, whether manufacturing or service oriented. As such every corporate
requires it for an effective management system. This report aims to cover the scope
and role of management accounting system required in a hospital. Ways in which
management accounting system can be implemented has been discussed throughout
the report.
Method to implement management accounting system in a hospital
Since the hospital is a service provider, it needs to formulate and implement an
effective management accounting system covering all the activities or operations of
the hospital. For an effective management system, maintaining coordination among
all the departments is a prerequisite. According to Zaleha, et. al. (2014), another
requirement is maintaining proper stock or inventory of medicines and injections all
the times. Proper physical verification should be done periodically and reasons for
any deviations or variations need to be figured out. There are several tools and
techniques for inventory control such as Just-in-time policy, Economic Order
Quantity, ABC analysis. Besides this, no single person should be given the
responsibility for approving and verifying all the expenses that need to be incurred in
running and maintain operations of the hospital. All the major expenses need to
approve by at least two responsible officers (Zaleha, et. al., 2014). This is done to
ensure that the transaction in relation to a particular expense is free from any error as
well as fraud. It also helps to create fear in the mind of the employees.
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Another major tool that can be implemented to ensure an effective management
system is adopting various tools of budgetary control. This will help to maintain a
control over all the concerned expenses by preparing a standard or benchmark of the
expenses and accordingly modifying and updating it from time to time. This will also
create a check on all the related expenses required to run and manage a hospital. It
will help in trend analysis and forecasting as well (Padovani, et. al., 2013). Hospital is
one of such service organizations which provides services as well as sell final products
in the form of medicines. Cost analysis or product costing is very important for every
profit-oriented organization as it helps in determination of profitability of each and
every service offered by the concerned hospital.
Only estimating budgets and preparing cost standards is not essential. For the better
result of management accounting system, report analysis is equally important
(Padovani, et. al., 2013). Various types of reports are prepared and presented so as to
get the actual and appropriate outcome of establishing standards. This will indirectly
assist the strategic level officers in taking most appropriate crucial and strategic
decisions since they get the summarized data.
Conclusion
From the above discussion, it can be concluded that management accounting system
is impulsive for every organization. Accordingly, importance and significance of
management accounting system have been covered. For better understanding, its
implication and need in a hospital are cited. This will facilitate to take better and most
economical decisions that need to be taken in the interest of the hospital. Besides
this, ways or methodology through which an effective management system can be
implemented has been explained at appropriate places.
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References
 Zaleha, S., Rasid, A., Isa, C., Wan Khairuzzaman, W., & Ismail, W., (2014). Management
accounting systems, enterprise risk management and organizational performance in
financial institutions. University of Malaysia, vol.22.
 Padovani, E., Orelli, L. R., & Young, W. D., (2013). Implementing Change in a Hospital
Management Accounting System. Journal Public Management Review.
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