Financial Statements And Disclosure Policies

2483 WordsApr 19, 201510 Pages
Financial Statements and Disclosure Policies “To state the facts frankly is not to despair the future nor indict the past. The prudent heir takes careful inventory of his legacies and gives a faithful accounting to those whom he owes an obligation of trust”, John F. Kennedy. In this quote, Kennedy expresses that the ultimate goal of finance is to gain trust from those who can help capitalize on the organization. Most importantly, it states that transparency and honesty are the best indications for building that trust. The need for trust is equally valid and critically important for healthcare organizations. As the healthcare industry grows, so does the policies and procedures for accurate and transparent accounting. Therefore, healthcare…show more content…
Therefore, healthcare leaders should be able to understand reporting guidelines to comply with reporting standards and avoid further negative implications for the organization. This paper will discuss the concept of liquidity, excess of revenue over expenses and increase in unrestricted net assets. In addition, it will focus on disclosure of accounting policies in the notes to financial statements. Finally, it will review two articles that overlook reporting disclosure guidelines for Municipal Securities, and the difference between charity care and bad debt reporting. Liquidity Liquidity is an imperative measure for healthcare organizations. As defined, liquidity is the ease and speed with which an asset turns into cash (Cleverley, Cleverley & Song, 2010). In fact, according to a study completed by Coyne (1985) cash liquidity is the most sensitive measure of solvency for healthcare organizations (Coyne & Singh, 2008). In response to this statement, Smith (2008) considers that because the financial solvency analysis is a critical area of importance, attention to cash liquidity measures is a powerful predictor of hospital failures. This because for many nonprofits their ability to pay their obligations on time (liquidity) (Keating & Frumkin, 2001) is a primary concern. In essence, if an organization
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