Three accountants started talking about hospitals. One said he was treated at a not-for-profit hospital, another said she was treated at a county hospital, and the third said he had just returned from the hospital run by the U.S. Veterans Administration. They wondered why three different bodies established accounting standards for hospitals. Give reasons for and against the existence of three accounting standards-setting bodies.
And what do you think?
http://www.accountingcoach.com/nonprofit-accounting/explanation
http://www.gasb.org/jsp/GASB/Page/GASBLandingPage&cid=1176160042327
http://www.va.gov/finance/docs/va-financialpolicyvolumeichapter01.pdf
Different laws apply in each instance.
There are several reasons for and against the existence of three accounting standards-setting bodies for hospitals.
Reasons for the existence of three accounting standards-setting bodies:
1. Specificity: Different types of hospitals have unique characteristics, financial structures, and reporting requirements. Different accounting standards-setting bodies can tailor their standards to address the particular needs and challenges of each type of hospital. For example, not-for-profit hospitals often rely heavily on donations, while county hospitals may be government-funded, and the U.S. Veterans Administration hospital system caters specifically to eligible veterans. Tailored accounting standards can ensure that financial reporting accurately reflects the distinct nature of each type of hospital.
2. Expertise: Establishing separate accounting standards-setting bodies for different types of hospitals allows for specialization and expertise development. Each body can focus on the specific nuances and complexities of their respective type of hospital, drawing on the knowledge and insights of industry experts and professionals. This can result in more accurate and relevant accounting standards, tailored to the unique challenges and requirements of each type of hospital.
Reasons against the existence of three accounting standards-setting bodies:
1. Complexity: Having separate accounting standards for different types of hospitals can lead to increased complexity and confusion. Applying and complying with multiple sets of standards can be burdensome for hospitals, requiring additional resources, training, and expertise. A single set of accounting standards that encompasses all types of hospitals could simplify financial reporting and promote consistency across the industry.
2. Inconsistency: Different accounting standards-setting bodies may create inconsistencies in financial reporting practices between different types of hospitals. This can make it challenging to compare and analyze financial information across different hospitals and make informed decisions. A uniform set of accounting standards could ensure consistency and comparability across the industry, making it easier to evaluate hospitals and assess their financial health.
In conclusion, while having three different accounting standards-setting bodies for hospitals may offer specificity and expertise, it can also introduce complexity and inconsistency. The decision to have multiple or a single set of accounting standards should weigh these factors and consider the overall benefits to the hospital industry.