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Accounting Principles and Ethics

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Accounting Principles and Ethics

A health care organization is believed to be a place where there is care, organization, consistency, and support; a place where patients need to feel and see the unity and harmony within the organization. Health care organizations necessitate this consistency, unity, and organization within because of its dependency on its' patients and to provide the proper care for such a diverse group of individuals. A health care organization also needs consistency and organization in financial management. Proper financial management shows strength in the organization and gives patients more faith. In order to have proper financial management, organization, and consistency, many health care organizations use the Generally Accepted Accounting Principles, corporate compliance, and the value of ethics.

Generally Accepted Accounting Principles

The General Accepted Accounting Principles (GAAP) refers to a set of accounting standards that are acknowledged by numerous companies. These principles are set by the Financial Accounting Standards Board. They are used to normalize financial accounting of public companies. These principles are vital for several reasons. They are important to companies and for "those whose stock trades on the stock exchanges" (Raithel, 2005). These standards let investors know of the financial state of the company. They also allow the company to maintain track of its cash flow.

Another reason that GAAP is important is for the reason that these standards offer consistency across the companies. When a company follows GAAP, the company becomes comparable financially with other companies that apply GAAP.

Corporate Compliance and Ethics

In the beginning, corporate compliance was all about following the written regulations of the company. Now, most companies are trying to mandate a compliance and ethics program. This would offer ethical training to the employees of a company. Most companies are opting to do this because they believe that compliance alone may not protect a business against risks such as fraud, scams, and abuse. However, there are some companies that do not wish to go along with the new guidelines of compliance and ethics because these companies feel that the ethics part of it is "too soft to implement" (Kaplan, 2005, 4).



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