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Essentials of Accounting for Governmental and Not-for-Profit Organizations

Essentials of Accounting for Governmental and Not-for-Profit Organizations. Chapter 12: Accounting for Hospitals and Other Care Providers. Overview of Chapter 12. Who has standard setting authority? What types of entities are included? General reporting principles Illustrative transactions

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Essentials of Accounting for Governmental and Not-for-Profit Organizations

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  1. Essentials of Accounting for Governmental and Not-for-Profit Organizations Chapter 12: Accounting for Hospitals and Other Care Providers

  2. Overview of Chapter 12 • Who has standard setting authority? • What types of entities are included? • General reporting principles • Illustrative transactions • Example Financial Statements

  3. Ownership Types

  4. Standard setting authority • GASB - Category A GAAP • Authority over government related hospitals • FASB - Category A GAAP • Private nonprofit hospitals • Major FASBs 93, 116,117, 124, 136 • Investor owned hospitals • Other FASBs • AICPA Audit Guide for Health Care Orgs.-Level B GAAP for government related, private NFPs, and business oriented

  5. Clinics Medical groups Individual practitioners Emergency care Laboratories Surgery care centers Continuing care HMOs Home health agencies Hospitals Nursing homes Rehabilitation centers What types of Organizations?

  6. Hospital Financial Statements • Balance Sheet, • Most use classified balance sheet – exception: continuing care communities • Stmt of Operations, • Stmt of Changes in Equity, • Stmt of Cash Flows and Notes

  7. Display Issues – Statement of Operations • Private NFPs and Government related entities must provide a Performance Indicator such as Operating Income which excludes • Equity transfers, Restricted Contributions, Contributions of LT assets, Most unrealized gains and losses, Restricted investment returns, Extraordinary items

  8. Display Issues – Statement of Operations cont’d • Patient service revenues shown net of contractual adjustments; separate out capitation agreement revenues • Patient service revenue excludes charity care

  9. Display Issues – Statement of Operations cont’d • Operating revenues often classified as • Net patient service revenues, premium (capitation) revenue, and Other Revenue (parking lot, gift shop, cafeteria, and tuition). • Unrestricted gifts may be treated as Operating or Nonoperating depending on policy. • Expenses: Minimum must report 2 functions: health care and general/admin.

  10. Display Issues – Balance Sheet • The term restricted used only for donor restrictions; Assets whose use is limited is used to indicate board or bond covenant restrictions. • FASB vs. GASB equity categories • FASB: unrestricted, temporarily restricted, permanently restricted • GASB: unrestricted, restricted, capital assets net of related debt

  11. Comparison of Financial Statements • Statement of Operations: • Similar for NFP, Government, Business • Statement of Changes in Net Assets: • NFP must show details of net changes for unrestricted, temporarily and permanently restricted

  12. Comparison of Financial Statements • Statement of Financial Position: • Classified, similar for NFP, Government, Business except for equity section • NFP: unrestricted, temporarily and permanently restricted • Government: unrestricted, restricted, invested in capital assets net of debt • Business: Contributed Capital and Retained Earnings • Statement of Cash Flows: • Bus and NFP, 3 sections; Governmental, 4 sections

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