Differences between managerial accounting and financial management
These terminologies are accounting terms that are commonly used by the management as they assess the financial performance of the company. Financial management is the management of funds of the organization in an efficient and effective way so as it may be generative and yield earnings. Managerial accounting is an accounting branch that mostly deals with confidential documents and reports that are usually for the top management use.
Financial management deals with the presentation of the financial performance and position of the company to the public/ external users who are able to gain information about the company through the reports created. They have to be accurately prepared and reflect a true and fair view as they would attract litigation issues if they are relied upon yet they are not reliable. Financial management has to rely on financial reports that are prepared under universally accepted standards that have to be adhered. The information relied upon has to be from historical sources and factual, and an independent audit review has to be undertaken so as to assess their viability and accuracy before external users and stakeholders rely on the information presented.
Managerial accounting deals with reports that are for internal use only mainly for the top management who use these reports to assess the targets and come up with strategies to achieve them. The reports are not confined by standards and the law unlike in financial accounting and do not require independent audit reviews. It deals with information that has been derived using statistical and scientific methods to estimate future values and projections. Unlike in financial accounting, managerial accounting does not assess the overall organization; it only focuses on certain departments and cost centers which it is able to evaluate its performance and projections.
How budget performance affects patient care and employee satisfaction
A budget is a tool of forecasting and projections that is able to access the expected values and performance of an organization in the future basing its information from the trend of the historical values and other macroeconomic conditions. In the Health Care Nursing Staff Budget proposal, deflation has been factored in to affect the projections as a macroeconomic factor.
A budget assists management in planning and controlling the factors of production of an organization in an aim of directing it towards favourable estimates that have been attained. According to the budget proposal, patient care can be assessed depending on the volume of patients observed. This has to be evaluated over a period so as to know the changes in the volume of patients in the Health Care. The company, in an aim of covering its increased expenses, could opt to increase the charges on the patients. Any continuous decrease in revenue after the adjustment would indicate reduced patient care since despite the price charged would not affect number of patients much if the care services are high.
Employee satisfaction is assessed by the elements named above since increased patient care often comes due to increased employee satisfaction hence he or she would offer better services. The budget projects that it would increase the salaries of the employees by $1 each. This would act as an incentive that will enhance employee satisfaction and hence better patient care. Considering the patient volume has been considered to be constant, the following years’ volume would indicate whether it was worth increasing the nurse’s salaries as it results to increased overall expenses in the company.
Needles, B. E., Powers, M., & Crosso, S. V. (2010). Financial & Managerial Accounting. (9 ed.). New York: Cengage Learning.