The Importance Of Financial Reporting In Organizations Essay

Financial reporting plays an important part in the organizational performance. Such organizations as the Patton-Fuller need accurate and transparent financial reporting to enhance the confidence of clients, who pay for health care services provided by the organization, that their funds are used properly and there are no manipulations or misuse of funds from the part of the hospital’s staff. In this regard, financial statement and auditing play the main part in the accurate identification of all financial operations, revenues and expenses of the Patton-Fuller that help clients and other stakeholders to receive all the information about the financial performance of the hospital.

The annual report, including the Patton-Fuller financial statements, reveals certain differences between audited and unaudited financial statements. First, the audited and unaudited financial statements have the difference of $1,000,000 in patient accounts receivable. In addition, there is $1,000,000 difference in the Statement of Revenue and Expenses of the company.  The difference in the audited and unaudited financial statements derives from doubtful accounts, which were not certain or questionable in the time of unaudited reporting and which have been finally revealed as irrelevant in the course of the auditing (Heilbroner & Milberg, 2015). In such a way, the auditing has revealed those doubtful and irrelevant accounts and made the financial statement accurate and grounded on actual facts that were relevant for the organization’s financial performance.

Such differences in audited and unaudited financial statements do occur because unaudited financial statements provide the general information and use data, which are not fully verified. Instead, unaudited financial statements use the estimated data to complete financial statements on the ground of expectations, when the data cannot be verified immediately. Hence, differences emerge, when the data are fully verified in the course of the auditing. As a result, the audited financial statements may be and are different as is the case of the Patton-Fuller. Such differences are natural and prove the importance of auditing for the accurate accounting and financial statements. Moreover, the auditing may revealed purposeful changes in financial statements made by companies and help to prevent frauds, manipulations and misuse of funds.

The effect of revenue sources on financial reporting at the hospital is considerable and defines the overall financial performance of the organization. In this regard, it is worth mentioning the fact that the hospital depends on funds obtained from health insurance companies, government, and clients. Their payments comprise the core of revenue sources for the organization. This is why the organization focuses on the maintenance of stable revenues through the close work with its major clients. In this regard, the client satisfaction plays a particularly important part because, otherwise, customers may grow dissatisfied and refuse from using health care services of the Patton-Fuller. As a result, the organization will face the cut of revenues that may threaten to the financial stability of the organization and its further survival. This is why the Patton-Fuller attempts to make its financial reporting transparent to make client certain that every dollar they pay for health care services received from the Patton-Fuller counts. The organization attempts to enhance the confidence of clients in its transparency and reliability to attract them and to maintain its financial performance and revenues stable.

At the same time, to make its financial reporting more accurate and effective, the Patton-Fuller tends to make its revenues and expenses grouped for planning and control. To put it more precisely, the Patton-Fuller Revenues and expenses of the organization are grouped on the ground of sources of revenues and areas, where the company spends its financial resources obtained from clients and other sources of revenues (Gitlow, 2013). In such a way, the organization can plan its revenues and expenses for the future. The Patton-Fuller may use the data available and grouped to forecast the expected revenues and expenses and to create the financial plan or budget for the next year. Such grouping is helpful because the organization can identify possible problems or under-funding of some areas as well as excessive funding of other areas. In such a way, the organization can plan its revenues and expenses more effectively that will make the organization more cost-efficient. The Patton-Fuller uses grouping of its revenues and expenses to determine the further strategic development of the organization by identifying areas which need more funding, for example.

At the same time, the grouping of revenues and expenses also helps the organization to enhance the control over the use of financial resources available to the organization. The organization may identify fast and accurately the particular group, where a problem occurs. For example, if the organization experiences the problem of misuse of funds, the auditor can identify the specific group, where the misuse of funds occurs due to the grouping of revenues and expenses. Then, it would be easier to find out the specific issue, why the misuse of funds occurs. Without such grouping, the control over revenues and expenses would be more difficult and less effective.

Thus, the Patton-Fuller uses the financial reporting, both audited and unaudited, to reach the transparency in its financial performance to gain the confidence of clients, because the organization depends on revenues from clients, directly, through client’s payments for health care services provided, or indirectly, through the coverage of health care costs of clients by health insurance companies or government.

References:

Gitlow, H. S. (2013). The Deming Guide to Quality and Competitive Position. Englewood Cliffs, N.J.: Prentice-Hall.

Heilbroner, R. L. and W. Milberg. (2015). The Making of Economic Society. New York: New Press.

The terms offer and acceptance. (2016, May 17). Retrieved from

[Accessed: January 20, 2022]

"The terms offer and acceptance." freeessays.club, 17 May 2016.

[Accessed: January 20, 2022]

freeessays.club (2016) The terms offer and acceptance [Online].
Available at:

[Accessed: January 20, 2022]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: January 20, 2022]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: January 20, 2022]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: January 20, 2022]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: January 20, 2022]
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