Not- For- Profit and Government Accounting

  1. What is the purpose of this article? Why is the article written?

The purpose of this section is to examine the impact or effect of normative and regulations factors focusing the shifting of cost is usually done by now- profit hospitals.  The article aims at identifying whether the constraints imposed by the stakeholders on nonprofit hospitals. Always trying to make them direct all the resources to programs meant to help the patients and the extent this action impacts the no- profit hospitals towards shifting costs to program services and not administrative functions to make it more efficient.


  1. Why is this topic important? Who is affected by this information?

The topic is imperative to both the organization stake holders and the constituents of all the no- profit hospitals. It provides the top most individuals with necessary assurance that the resources are allocated to the right and meaningful projects. On the other hand, it ensures that quality service is offered at the on- profit hospitals as part of the Government service to the people of the land. Accountants or the individuals who perform auditing also benefit from this information because they can identify the distinct challenges that could be causing the poor performance of the said no- profit institutions or reasons of a low PSR.


  1. What is the problem(s) described in the article? Does the author address possible solutions? If so, explain.

Problems exist that hinders the no- profit hospitals from fully achieving their objectives. Economic constraints and institutional pressures impose a significant challenge to both technical activities and managerial tasks that are affiliated with the administration and source of the necessary resources. The no- profit hospitals can adopt the following solutions for the above problems. These solutions will enable them to realize the high PSRs. They include acquiescence to the norms of that said institution, Trying to balance or bargain with the external constituents as the way of compromising, avoiding is also a solution which is achieved by intentional escape from the expectations of the institution, defying or ignoring the institutional expectations and finally manipulation of the institutional pressures. However of all these techniques avoidance works best for the no- profit hospitals

  1. What are the incentives of the discussed parties?

The managers of such no- profit institutions find incentives to shift cost towards their 990s. This greatly depends on the classification of expenses and the sources of the necessary resources. For example the no- profit hospitals in California and the entire United States the 990 serves as the source of financial reports.

  1. How does this article fit into ACCT 4600? What do you conclude or take away from this article?

The report has proved to be vital because the information found through accounting process helps the stakeholders to monitor the no- profit organizations such as the public hospitals. Without accounting the public hospitals or other institutions may not ensure proper allocation of the available resources. Therefore, accountability has been upheld by all the concerned managers. The accountants employ various techniques to measure the efficiency of such no- profit organization. The most favorable are the Program Service Ratio, using this method a high program service ratio shows that the resources have been efficiently used. That is all the resources are allocated to the beneficiaries it is meant to serve for example patients in a no- profit hospital usually owned by the Government.

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