Lifecare Hospital: Accounting Information System

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Table of Contents

Introduction
Analysis of Control Frameworks (CF)
Information Processing and Documentation
Conclusion
References

Introduction

In the conditions of economic development, the enterprises face multiple changes in the business environments, and it provokes the necessity for the design of managerial tasks aimed to control the external and internal transformations and to create the adaptive operational processes and systems. The systematization of internal control which has a purpose of timely identification of the resources reserves and disproportions becomes especially significant because it allows the companies to elaborate and adopt the measures for reduction of risks and achievement of financial sustainability.

The renovation of activities targeting the increase in customer satisfaction and productivity enhancement requires the introduction of new methods of organizational processes, technology, and finance arrangement. In this case, the preventive control procedures, including evaluation of effectiveness and efficiency, are regarded as the essential activities for rationalization of decision-making and selection of alternative programs of development. Many of organizational issues can be resolved through the formation of Accounting Information System (AIS) based on the analysis of internal factors of growth and evaluation of external influences.

The purpose of the paper is the assessment of AIS implemented in the UAE Lifecare Hospital (LCH), a unit of VPS Healthcare Hospital, located in Musaffah district of Abu Dhabi. The company provides advanced healthcare services for the district population and operates over twenty departments, including laboratory services, emergency services, and pharmacy (Life Care Hospital Musaffah Profile, 2014). A large scale of operations requires a thorough control and allocation of resources. The evaluation of LCHs AIS frameworks and activities will help to establish the extent of its effectiveness.

Analysis of Control Frameworks (CF)

CF for Internal and External Organizational Environments

The organizational control processes ensure the establishment of mutual interrelations between the managerial system and the managed objects or activities. The control processes help managers to accumulate the important information about the actual state and consequences of the managerial decisions implementation. The function of internal control implies the evaluation and analysis of working outcomes, and it helps to assess the extent of working efficiency and correct the selected trajectories if needed. Organizational AIS should comply with all factors associated with the current position of the company in the market (Hanifi & Taleei, 2015). And these factors may be both internal and external.

According to LCHs model of control, the internal environment includes organizational structure, culture, and resources. The external factors are competitors in the market, consumers, suppliers, shareholders, and governmental institutions. In LCHs CF, the external factors shape the rules and standards of internal conduct and establishment of relationships with stakeholders; these standards serve as the orientation for the firm to follow.

LCH evaluates multiple external factors such as level of customers income, currency exchange rate, inflation level, taxation rates, market competition, etc. to control its financial operations. The neglect of external factors may lead to profitability decline and adoption of inadequate financial policies (Marin, 2015).

The internal factors included in LCHs model may be represented as the set of seven groups of factors: resource and market, technology, integration strategy, financial and economic policy, social performance strategy, and managerial indicators (Snoj, Gabrijan, & Milfelner, 2010). The internal organizational factors are shaped by LCHs executive group that conducts the multidimensional analysis of these factors as an initial phase of the decision-making process. The internal analysis helps LCH to identify the operational limits and select the appropriate directions for the potential improvements and detect the weakest spots in AIS.

The current CF for evaluation of internal and external factors adopted by LCH may be considered effective because it helps the organization to analyze the information received by monitoring the environment, identify the risks and opportunities, and develop the strategies for their management.

CF for Physical Assets

LCHs CF allows the organization to control the tangible assets supply, detect the surplus of unutilized objects, and develop a plan for the enhancement of fixed assets implementation (Avellanet, 2005). LCH regularly controls the formation and application of tangible assets through the realization of the following steps:

the detection of storage and preservation conditions in the enterprise facilities,
analysis of expediency of purchase which helps to reveal the completeness, timeliness and correctness of the fixed assets entered into account,
inspection of compliance with the order of acquisitions and disposals,
analysis of effectiveness and correctness of assets presence and movement in the accounting, statistical and tax reporting documentation.

CF for Information Technology (IT)

IT is an essential part of LCH business operation and service provision. The company uses an integrated system to meet various demands in healthcare provision and increase customer satisfaction (Achieving excellence through innovation, 2016). The activities included in LCHs IT control model are the conduction of IT analysis for the detection of the topical issues in organizational IT structure and related business risks; measuring the level of IT user satisfaction; IT inventory; conduction of IT infrastructure and IT management audit; and analysis of processes automation.

The control activities facilitate the development of complex IT strategy and help to reduce the risks of IT malfunctions which may result in productivity decrease (Li, Peters, Richardson, & Weidenmier Watson, 2012). The current CF for IT allows LCH to evaluate system functioning, prevent defects and systematic disintegration and take timely measures for technology advancement.

CF for Cash Flows

LCH established multiple relationships with business partners, customers, and other organizations on the everyday basis, and these professional interrelations are based on financial settlements and payments. The settlement of cash transactions should follow the strict regulations (Duhovnik, 2008). It is better to inspect cash transaction continuously because of the high level of asset mobility that may lead to financial abuse (Duhovnik, 2008).

LCHs cash control activities include daily cash inventory, daily reporting, evaluation of completeness and timeliness of cash posting, control of write-offs in flow, analysis of financial discipline and correctness of operations presence in the accounting reports. The mentioned continuous control activities comply with the legal regulations and accounting standards. The cash control activities are meant to prevent accounting standards violations and facilitate the course of annual audit inspection by providing the structured and well-systematized information (Duhovnik, 2008).

Information Processing and Documentation

Informational management functions in the informational field within the organization and is characterized by the set of methods and means which allow the staff members to arrange the processes of reception, transformation, storage, and distribution of data (Li et al., 2012). Information processes are aimed at the optimization of organizational management, development of informational resources in the enterprise and their usage in business.

The first type of LCHs information processes and documentation are meant to provide economic data to the external users, i.e. investors, tax service organizations, shareholders, etc. Such documents include 10-K reports, accounting documents, and so on. The second type of information processes relates to the tasks of internal analysis used for the strategic management and decision-making.

The development of organizational knowledge happens through the processes of information accumulation and analysis, evaluation of environment, and formulation of goals in business (Hanifi & Taleei, 2015). The second type of information documentation is associated with the organizational reporting system that serves as the basis for the development of strategic tasks, i.e. daily reports, managerial reports, or archives.

Information procedures are widely used in the hospital for the establishment of professional relations with customers, and storage of patients data. LCH uses the patient cards for the archiving of customers history and facilitating communication with healthcare providers. The documents are also used to keep statistical reporting that can be used as a valuable informational resource for the improvement of relationships with patients and service provision enhancement.

Data Flow Diagram.

Conclusion

The analysis of LCHs AIS helped to reveal that control is an intrinsic part of the managerial cycle. It helps to establish the mutual connection with the managed activities, shapes the information about the changes within the operational processes and management systems. The major portion of information is kept in the accounting system and can be effectively used in the decision-making process.

The integration of AIS indicators into the development of managerial strategies may help to increase productivity, cost-efficiency, and effectiveness of resources allocation. AIS facilitates informational flows both within and outside the organizations enhances communication modes and data sharing with the major stakeholders, and, as a result, increases the quality of customer satisfaction. Overall, a well-developed AIS may be regarded as a core advantage in any industry because it improves working productivity and, in this way, contributes to the increase in organizational competitiveness.

References

Achieving excellence through innovation. (2016). Web.

Avellanet, A. W. (2005). Fixed assets: Internal controls and risks. Internal Auditing, 20(4), 3-13. Web.

Duhovnik, M. (2008). Improvements of the cash-flow statement control function in financial reporting. Proceedings of Rijeka School of Economics: Journal of Economics And Business, 26(1), 123-150.

Hanifi, F., & Taleei, A. (2015). Accounting information system and managements decision making process. Management Science Letters, 5(7), 685-694. Web.

Li, C., Peters, G. F., Richardson, V. J., & Weidenmier Watson, M. (2012). The consequences of information technology control weaknesses on management information systems: The case of Sarbanes-Oxley internal control reports. MIS Quarterly, 36(1), 179-204.

Life Care Hospital Musaffah Profile. (2014). Web.

Marin, R. M. (2015). The possibility of developing a sustainable financial-accounting information system. Valahian Journal of Economic Studies, 6(1), 103-112. Web.

Snoj, B., Gabrijan, V., & Milfelner, B. (2010). Internal and external market orientation as organizational resources consequences for market and financial performance. Trziste = Market, 22(2), 223-241. Web.

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