Financial Management for Public, Essay Example

Upon reading the auditor’s opinion letter, red flags were raised because the auditors stated that their responsibility is “to express an opinion on these financial statements based on our audits”. However, the letter is spent primarily convincing the recipients of the purpose of the audit and describing how the investigation should operate. In the end, the CPAs finally claim that the medical center’s reported operations are in accordance with accounting standards. Despite this, no explanation is given to why this is the case, and no detail of any sort that alludes to these specific operations are provided. It appears as if the author of this letter utilizes the same letter for all of his clients, and simply replaces the name of the client or organization.

The unusual items that catch my eye on the balance sheet, operating statement, and cash flow statement include the fact that “other revenue” is not specified in detail, which makes ability to identify the source of the profit difficult and therefore indicate that the reporting may not be valid. Furthermore, it is surprising that in the “Statements of Changes in Net Assets”, there were many categories not filled in, indicating that there were few investments and contributions made to the hospital. This appears to be unlikely and the result of a reporting error. In addition, it makes little sense that in the “Statements of Financial Position”, there were great discrepancies between 2011 and 2012. Other unusual items include the pledge receivable because the net allowance for the uncollectable pledge is kept out of the current asset and in addition, under statements of operations, the unusual item is the net asset released from restrictions used for capital acquisition.

Some of the notes included create a cause for concern. First, the business should not be considered solely to be a non-for-profit organization because it is a healthcare facility. Therefore, it must be treated as such. In addition, all aspects of fair value measurements are not always applicable for this type of organization. Lastly, all pledges must be reported for the year that they were made, whether or not these funds have awarded. Other than these minor errors, there is no cause for concern. It would have been beneficial for the CPAs to have been more specific in these notes.

These records demonstrate that the financial performance of the company has improved compared to the previous year. This is in part due to the fact that the company has managed to reduce its operating cost to improve its profit margin.

References

Finkler, S. A. (2010). Financial management for public, health, and not-for-profit organizations (3rd ed.).Upper Saddle River, NJ: Prentice Hall.