Managing Finance in Public Sector

This report provides a comprehensive analysis of financial management within the public sector, specifically focusing on the National Health Service (NHS) in England. It covers various aspects including the explanation of the public sector, funding and operating systems, financial reporting requirements, accountability, financial decision-making processes, and tender procedures. The report also delves into the criteria and scoring systems used for evaluating tenders. It highlights the importance of financial information for meeting stakeholder objectives and ensuring effective monitoring and control of financial resources. The document concludes with a summary of the key findings and recommendations related to financial management in the NHS.

MANAGING FINANCE IN THE PUBLIC

SECTOR
Assignment by
TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 In chosen nation explanation of the public sector............................................................1
1.2 Organisations funding and operating system...................................................................3
1.3 Information which are required to reporting in public sector company...........................8
TASK 2............................................................................................................................................9
2.1 Accountability of the firm with availability of financial information..............................9
2.2 Monitoring and controlling of financial resources in NHS organisation.......................11
2.3 Financial decision making process for NHS..................................................................12
TASK 3..........................................................................................................................................14
3.1 Tender documentation and tender process for NHS organisation..................................14
3.2 Criteria and scoring system for evaluation of tenders....................................................16
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................19

INTRODUCTION
Finance plays a significant role in each and every business, without financial resources an
enterprise can not exist and survive in the market or industry. The main objective of managing
finance is to assure the best use of available funds. It further ensures optimum utilization of
funds at least cost. Thereafter, managing finance assure constant and appropriate supply of funds
to the business. The present report is based on the national heath services PLC (NHS) company
which is England based firm and operating in the healthcare sector. The company provides its
products and services across the world. The report describes informations which are needed for
increase the fund and require reporting to the authority body. Another part of the project shows
responsibility for financial informations and process for making financial decisions in the public
sector business. Apart from this last part of the report describes regarding to the tender and its
documentation as well as system of scoring for evaluating tenders.
TASK 1
1.1 In chosen nation explanation of the public sector
The public sector can be referred to as the state sector or the government sector, is a
portion of the state that deals with the manufacturing, control, sale, precondition, transportation
and allotment of goods and services by and for the government or its residents, whether national,
regional or local/municipal (Flynn, 2012). It is the income generating division which renders
administrative services to the public and community. The public sector differs from nation to
nation where it may involve, health care, education, roadways, railways, postal services, military
and police etc. In the public organisations there are all the control and monitoring is in
government's hand, it can be said that regulatory body of public company is government of the
country. Here the national health services company which is operating in the England country
where it needs to follow all the rules and regulations framed by respective country. Ownership of
the company is with government due to regulating the public organisations and all the policies
must be followed by the NHS. The England is in Europe continent where a union is established
by the countries for public sector and private sector companies as well. As per the European
union the public sector company has not to do any discrimination between employees, customers
and other stakeholders. Apart from this in the county the company can move or sell and buy
goods and services without any taxes and tariffs. In the England there is policy for the
government companies is that free movement of its products and services. Apart from this the
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public sector business entities can freely provide its services across the world, in case of health
care companies there are no restrictions as well as obstacles in order to provide its services in the
world (Graham, 2014).
Furthermore, in the England country the public sector companies has freedom in order to
establish a new firm or expand existing business. There are all the rules, regulations and policies
as well procedures are better up to greater extent due to not facing any obstacles for establish and
operate in the country. As per the rules of England public sector companies are needs to follow
all the rules and regulation which are imposed by government for various functions such as
financial, operation, accounting and auditing, human resources, recruitment and selection process
etc. (NHS England. 2016). According to the present scenario government of the country is
contributing in the financial resources by which profitability ratios are high and business
performance is also better in comparison to another segment.
In the business entity such as National Health Services finance plays an important role in
order to provide various kinds of services related to health and medicines as well. Further, for
providing such kinds of services the company needs fund which is raises from various financing
sources. The NHS collects fund or financial resources from mainly three aspects and avenues
which are such as taxation, national insurance as well as charges which are taken from the
patients. Among these all the three criterias higher the contribution in terms of providing fund to
NHS is of the national insurance as well as taxation. From the below mentioned graph it can be
clearly visualised that approximate more than 98% fund id to be provided by the national
insurance and taxation amount. On the other hand side, contribution of charges given by patients
is only approximate 2% in the year 2014-15. It can be said that there is a huge portion of the
national insurance and taxation is with the NHS in terms of raising capital at the workplace.
Further, very minor and negligible proportion is of the patients which is in terms of fees and
charges and helps to the NHS for business expansion. In the financial year 2014-15, the company
such as NHS was received Grant-In-Aid funding which is worth of approximately £97.3 billion
which is against to the amount worth of £93.4 billion in the year 2013-14.
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1.2 Organisations funding and operating system
Every organisation whether it is public, private or non profit, all are needs finance or
capital in order to expand the business. For raise fund or capital in the firm there are different
sources available which provide financial services to the companies. National health services
organisation which is a public sector company also require finance for expand the services and
products as well as increase consumers. The government of the country is main sources of
finance for public sector enterprises and other several sources are also available. Another various
sources of finance are such as equity share, bank loan, venture capital, retained earnings,
merchant banking, leasing etc. When the NHS raise fund through various sources then it has to
pay cost of this in terms of different kinds and there are some limitation as well (Wang, 2015).
Drawbacks or limitations of the funding are enumerated below:
Most of the business entities prefer equity financing in order to enhance financial
resources in the company which helps to expand firm and product range as well. Very main
limitation of this funding is that, the company have to pay dividend amount year by year to the
stakeholders or investors. This factor impact to the financial performance of the firm adversely
because dividend is given to stakeholders from net profit of the enterprise. Apart from this
without listing or registering in stock market of respective country NHS cannot raise fund
through equity and unable to offer shares. As per the another funding option venture capital it
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imposes cost on company in terms of stake of the firm. When the entity raise fund from venture
capital then it needs to give stake and dividend amount as well from margin earned by it.
Dividend is just like expense of the firm which lead to decrease level of profit by which financial
performance hampers in the industry (Shah, 2007). Hence, it can be said that funding is affects to
the firm in negative manner. Apart from this when NHS raise capital from bank loan then cost of
it is in terms of interest amount which is depended on the stock market. Interest amount is also
leads to reduce benefits or profit of the firm and impact on profitability in negative manner.
Drawback of bank loan is that when the firm is unable to pay loan amount then bank has power
to wound up whole business.
Government funding is another main source for the company in order to raise finance. In
the present case NHS raise fund from European regional development fund which a kind of
government funding. In this limitation is that, if government found any problem in respective
business then it can terminate contract and not provide fund. As per the sources all formalities
related to documentation must be appropriate, without this firm cannot raise capital in the
company (Starling, 2010). Hence, it can be analysed that with various advantages on other side
there are several drawbacks of the funding.
In the business various financial informations are available and analysed from different
financial statements like as Income statement, Balance sheet, Statement of cash flow, Statement
of shareholder's equity and gains etc. These all the statements and financial informations are
helpful for the NHS in order to meet accountability requirements as well as goals and objectives
of it. Further, the NHS has various trusts among then NHS foundation trust is to be chosen at
over here. The respective trust is a semi-autonomous unit of the NHS and take care department
of health by providing adequate fund to it. With the help of financial information available in
balance sheet the company able to meet various accountability requirements of
There are various kinds of accountability requirements are need to meet for the company
such as National Health Services foundation trusts in terms of statutory which helps to it in the
future in order to organise and raise fund. With the help of financial information available in
balance sheet the company able to meet various accountability requirements. Many kinds of
statutory accountability requirements for the entity like as NHS foundations trust with help of
balance sheet are stated as below:
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 The respective statutory requirements are for keeping record of various financial
transactions as well as make the accounts effectively of NHS.
 With this the management such as NHS is highly able to make different financial
accounts and statements for the end of every accounting year.
 To comply various kinds of instructions, guidelines and directions which are
formulated and given by the respective authority and regulatory body of NHS
foundation trust.
 To make accounting treatment and present annual report of NHS along with
financial statements in proper and structured format.
 To present and show consolidated trust and information about different kinds of
consolidated financial accounts and informations of NHS.
 Apart from this statutory requirements of the financial information and statement
are to publish in the industry or market at or before time period or deadline given
to the NHS.
Statement of income of public sector organisation:
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Statement of cash flow of public sector organisation:
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Statement of financial position of public sector organisation:
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1.3 Information which are required to reporting in public sector company
The financial information reported to varied public sector company is described as
follows: Information regarding source of public income: The main financial gain of government
enterprise is directly in the form of taxes and duties. The different projects and activities
of regional government is funded from the finances procured through taxes which are
charged from company and private individuals (Penman and Penman, 2007). The NHS is
needed to present information regarding total amount collected through taxes, its use in
different areas etc. in form of financial statements. Reported financial and non financial performance indicators: The financial performance
indicators is effective method that state how effectively company use it financial and
other assets from original way of business and yield revenue. They must be
communicated in yearly financial report so that stakeholders of NHS can determine the
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financial position of the business (Revsine and et.al., 2005). The financial performance
can be shown through organization gain, sales, cash inflows and outflows, worth of
assets. The financial data must be communicated so that capitalist can make wise
judgement on whether to spend or not in NHS. While, non financial performance
indicators depends upon the satisfaction of employee, customers, service quality, market
share, and rate if creativity introduced in offering by entity (Schroeder, Clark and Cathey,
2011). The information regarding non financial and financial indicators is communicated
which assist in knowing the forthcoming fiscal performance of NHS. Published reports for varied entities: The public sector company is needed to prepare
annual report. It is broad report on the entity activities throughout preceding year. The
financial information along with the list of board of directors, key person of company are
detailed in annual report (Sueyoshi, 2005). Financial statements: It is the formal record of the financial activities and standing of
NHS. It further includes balance sheet, income statement, cash flow details etc. They
must be reliable as capitalist decision to make investment is depended upon the financial
statements.
 Quality commission report: Being a health care organization, it is very much important
for NHS to provide the best quality services to its customers. The care quality report
specifies that company is maintaining the said quality standards or not (Wildeman and
Jogo, 2012).
TASK 2
2.1 Accountability of the firm with availability of financial information
Financial data are very necessary for the management which helps to determine financial
performance and accountability towards various stakeholders of the national health services
organisation. Analysis of the financial data which are helps to meet objectives of its stakeholders,
given as below:
Financial informations are derived from financial statements of the NHS company. There
are different financial statements are such as profit and loss statement, balance sheet or statement
of financial position, cash flow statement etc. From this all statement the company is able to
meet with goals of the various stakeholders (Bandy, 2014). Customers are key stakeholder of the
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company, without them a business can not run in the industry. They have objective towards the
firm that, it provides better products and services, when the firm has adequate finance then able
to fulfil their objectives. Financial information is profit which is most important, when investors
or shareholders make investment in the firm then analyse profitability. Hence, the firm generate
higher profit leads to attract more number of investors and increase shareholders. Apart from this
another financial informations are related to assets and liabilities of the firm which are shown in
balance sheet. Employees are another key element of the national service organisation, financial
data such as profit requires providing adequate and proper wages and salary by which it able to
meet their requirements. When NHS wants to raise fund then its responsibility that it has all the
informations properly or not (White, 2015). Furthermore, budget is also another concept which
provides financial information for the upcoming financial year. By this it able to fulfil objectives
and goals which are its stakeholders have. Every business entity have responsibilities that to
meet goals and objectives of several stakeholders such as consumer, investor, employee,
government etc.
In the firm there are various kinds of financial informations are available which are
derived from the financial statements such as balance sheet, incomes statement, cash flow
statement, total shareholder's equity and gains etc. With the help of these various financial
informations the company is able to monitor as well as control over the extra and miscellaneous
financial transactions. For example: when talking about income statement then it shows various
costs and revenue comes into existence at the workplace of NHS. Further, it able to know that
company has profit in which direction such as higher or lower. If it found that expenses are more
as compare to incomes then able to manager extra costs and monitor the activity where
expenditures incur at higher level. Furthermore, it able to formulate better strategies in order to
control over the extra expenses and fulfil objectives such as maximize profit.
Moreover, financial information in terms of liquid position is to be derived from balance
sheet of NHS. If the management found that ability of entity is not good and unable to meet with
short term debt then make various strategies to attract more number of customers and enhance
level of sales. Hence, it can be said that with the help of financial informations the NHS is highly
able to control and monitor over the firm and achieve financial goals and objectives of it.
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