Confirmations used for confirming accounts receivables

a.)        ‘Positive’ confirmations and ‘Negative’ confirmation are the two types of confirmation used for accounts receivable. A positive confirmation is a communication addressed to the debtor requesting him/her to confirm whether the balance as stated in the confirmation is correct or not.

A negative confirmation is one where a response is requested from the debtor, if the balance stated in the confirmation is incorrect.

Positive confirmations are used in case of debtors where large amounts are due and the number of accounts is low. Positive confirmations are also used when there is evidence or suspicion of fraud or serious error. When regulatory authorities require balances, the positive balance confirmations are used. Negative confirmations are used when the number of ‘Accounts Receivable’ accounts is large and individual balances are small.

(b.)       For evaluating the collectibility of the Accounts Receivable, the auditors would look into the ageing of the Accounts Receivable and discuss collectibility of individual accounts with the personnel of the clients. They may also examine the correspondence with the important customers and also the financial statements of these customers.

(c.)       When the public accountant comes across an instance where a debtor fails to respond to positive confirmation, the accountant cannot presume that the debtor checked the request and did not respond because there is no error. There may be some busy customers who do not find enough time to check their confirmations. But there may be cases also, where frauds or embezzlements might have taken place. The Public Accountant may desire that such accounts may further be pursued with second positive confirmations.

(d.)       When no response is received for second positive confirmation, the auditors resort to alternative procedures for verification. They examine the customer’s formal remittance advice and cash receipts journals. Correspondence in client’s files can also be checked to for satisfactory evidence. Verification of shipping documents, sales invoices contracts and other instruments are also useful. In certain unusual cases, the auditor can telephone the client and have a discussion with him directly. In cases where substantial amounts are involved, the public auditor may go to the extent of investigating the existence of customer or his financial status.

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Accounting Short Answer Questions

1. Explain the meaning of the terms "tangible" and "intangible" and discuss how these terms are used in describing assets.

Tangible assets are the economic resources of a firm, whose existence can be physically felt or perceived.
Examples: Inventory, land and buildings and plant and machinery.  
              
Intangible assets are non physical economic resources and rights, which carry a value with them and confer some advantage on the firm in the market place.

Examples: Goodwill, copyrights, patents and trademarks.

            In accounting, it is only the tangible assets that are found in the balance sheet. Intangible assets do not find a place in the balance sheet of the firm. But while calculating the value of the firm in the market, the intangible assts are also taken into account.

2. Discuss the advantages of establishing a line of credit

            A line of credit is a commitment from the bank to lend the firm up to a certain amount to meet various financial needs. It provides an opportunity for the firm to establish access to credit even before the exact expenditure decisions are finalized. It is more flexible than a loan, which makes finance available for a specific purpose. It can be used for different purposes. It need not be drawn at a time like a loan, but can be used as and when the need arises. The line of credit is thus the most flexible and comfortable financing arrangement for a firm to take care of its present and future needs as well as contingencies.

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Analyzing the fit between Systems Approach and Nursing

1.Introduction

Systems approach of health care delivery constitutes a patient centred health care-system. For the purpose, a four level health care system has been devised. Under this system, the health care has been divided into four levels (1.)The individual patient,(2.)The care team which includes professional care providers like clinicians and pharmacists,(3.)the organization like the hospital, clinic or nursing home which provides support to the development and work of care teams by providing infrastructure and other resources,(4.)The political and economic environment applying to all the above discussions (Brandt& Gardner , 2000).

2. Analysis

At present, the health care delivery system comprises of hospitals where individual departments operate almost autonomously. Clinics, laboratories, pharmacies and all other organizations forming part of the health care delivery system act as separate units. All these together. All these together are called as health care system even though it is not intended to be a system and never functioned as a system, in the true definition by ‘systems approach’ (Brandt& Gardner ,2000).

The shift from the present situation to systems approach requires that every participating division recognizes its influence on all other divisions. Each division will try to achieve highest performance in individual functioning and at the same time contribute to optimizing the performance of a system as a whole (White, 1991).  Moreover an outlook should be developed among the care team members like clinicians in different specialities, pharmacists, nurses, social workers, psychologists that this main motto is the optimum functioning of the system and cooperative functioning by interdependence among them is the key to such optimization (Ollila, 2005).

The Health care system involves many interacting elements. So special tools are required to perform a systems analysis (Brandt& Gardner ,2000). So a model of the health care delivery process must incorporate narrations of processes detailing the variety of activities from nurses administering medicines to examination by doctor, laboratory tests, the filling of prescription by a pharmacist and follow-up visits by the nurse. The model must very clearly lay down the functions of every unit and constituent members. Since the overall performance of the system depends not merely on the performance of clinical side, perfect coordination between administrative wing and clinical wing should be ensured (Ollila, 2005).

3. Summary

True, there will be resistance to systems approach introduction from various quarters, because it results in loss of autonomy, and identity, but the need for betterment of health. Care delivery system warrants the same. Introduction of systems approach requires basically attitudinal changes and not much capital investment. Therefore it should not be difficult to implement it in hospitals where there is a resource crunch(Brandt& Gardner ,2000).

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