An independent audit provides an independent opinion to the shareholders on the truth, fairness, and accuracy of the financial statements, whether they have been properly formulated in accordance with the Organization’s Act, and report to the shareholders on other necessities of the firm laws. It increases the shareholders’ confidence and consequently reduces investor risk.
An auditor’s management letter is a representation letter written by a healthcare organization’s auditors and signed by senior company management that attests to the accuracy of financial statements submitted by the company for auditing. On the other hand, an opinion letter is a letter is a formal expression of a judgment or advice based on an expert’s special knowledge, which is usually drafted upon the client’s appeal.
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Cash inflow within a nursing firm usually comes from patients’ payment, investors, loans, or interests acquired from investments and savings. Cash outflow is the expenses in healthcare such as paying staff, rent, and stock of medicine. To know the cash flow in a business is usually essential for business flow for it helps to determine whether there is positive flow of cash in the business or negative flow. High positive flow means that there is more cash inflow than outflow i.e. less money paying out.
The financial statements usually provide adequate information about the financial position and results of operations in healthcare organizations. They play an immense role in managing money risks and help to achieve financial goals in the healthcare organization. Notes to financial statements usually provide information on matters such as depreciation, leases, and income taxes. They are usually appended to the end of financial statements. Examples of notes to financial statements include notes reporting on debt, explanation on intangible assets and depreciating assets, and details on value of inventory.
The financial statements provide adequate information for managerial purposes. Accurate financial statements are crucial in strategic planning, decision making and forecasting. Finance manager uses them to look at the value of assets he currently holds and make decision whether to purchase more. In addition, managers use them to make long-term investment decisions and perform financial analysis in order to provide efficient healthcare to patients. Further, managers depend on financial statements to help improve payment cycles of the nurses and health workers.
