The Conceptual Framework Approach - Case Study Example

Accounting Assignment 1: Case Study College: Name: Students ID: Date: Course Name: Unit Code: Time: Instructor: The accountancy profession is exceptionally different. Each one member is not only entirely responsible in satisfying the desires of an individual client or employer but also required to perform in the public interest. That’s why the accounting profession is universally guided by Codes of Conduct. The codes set out fundamental principles that include; objectivity, integrity, professional behaviour, professional competence and due care as well as confidentiality. All members are called upon to observe and act in accordance with the codes based on (1) their understanding and deliberate engagements; (2) support by fellow members and public view; and (3) corrective actions, once required, touching members who fail to abide by the rules (APESB, 2014). Members ought to be ready to substantiate any deviation from the rules. However, members are likely to bump into a number of dealings or situations that threaten their submission to the rules. Furthermore, the nature of schedules and work projects possibly will be different and therefore create different threats that call for the use of different safeguards (AICPA, 2014). It is in light of this that the codes establish a conceptual framework approach that sets out the process to be followed in dealing with any situation such as the one faced by the financial manager (Chattered Accountant) (APES 110, 2011). The approach would help the financial manager to assess whether that occurrence would lead those charged with governance being wary of the applicable information to conclude that there is a danger to the member’s passivity with the rules that is not at an acceptable level. This is necessary given that there is no version that addresses that specific association or context. According to the APES 110 (2011), at the time of making that evaluation, the financial manager is supposed to follow three main steps in applying the conceptual framework approach: I. Identify the Threat Members bump into associations and situations in their day to day undertakings and work assignments that will more often than not breed various threats to complying with the fundamental principles. Such threats are commonly classified into: advocacy, adverse interest, familiarity, self-review, self-interest, and undue influence/intimidation. Therefore, the financial manager has to start by identifying the threat that lead to the fraud (APESB, 2014); II. Evaluate the Implication of the Threat After identifying the threat, the financial managers should move to assessing the implication of the identified threat, to find out whether it is at an acceptable level. The acceptable level of a threat is the level at which a rational and well-versed third party wary of the pertinent information is likely to determine that the threat possibly will not confront the member’s compliance with the fundamental principles (APES 110, 2011). The financial manager is supposed to think through qualitative plus quantitative factors while assessing the implication of the threat, together with the point to which existing safeguards previously shrink the threat to an acceptable level. If the financial manager’s assessment indicates that a rational and well-versed third party wary of the pertinent information is likely to determine that the threat possibly will not confront the member’s compliance with the fundamental principles, the threat is at an acceptable level and he is not supposed to assess the threat beyond this point in observing the conceptual framework approach (APES 110, 2011); III. Find and Apply Safeguards If the financial manager’s assessment indicates that the threat is not at an acceptable level, he is required to use safeguards to abolish the threat or lessen it to an acceptable level. The financial manager ought to be decisive in choosing safeguards to apply, for the reason that, the helpfulness of the safeguards will be contingent on the situation. The financial manager may well apply several safeguards to eradicate or lessen one threat to an acceptable level. There are quite a few instances where an identified threat may well be so weighty that no safeguards will abolish the threat or shrink it to an acceptable level, or the member possibly will not have the capacity to implement operational safeguards. If the financial manager is caught up in such a situation, the APES 110 (2011) indicates that offering particular professional services would compromise his compliance with the fundamental principles, and it is at this point that the financial manager is supposed to decide whether to decline or terminate the professional services or report to those in governance. CIPFA (2011) points out that accountants need to work in a way such that they win trust from the larger society, individual employers, and clients along with other stakeholders. It is projected that the work of accountants ought to be gracious with no personal bias, done expertly, and verifiable. However conflicts will arise. The Codes of Conduct require the financial manager to deal with any conflict by acting in accordance with the fundamental principles. At the time of commencing a legal or unofficial conflict resolution course, the factors listed below have got to be considered, either individually or together with other factors. These are the ethical considerations that the financial manager will consider in deciding whether or not to prosecute the matter. i. Relevant facts; ii. Ethical issues involved; iii. Fundamental principles related to the matter in question; iv. Established internal procedures; and v. Alternative courses of action. Having reflected on the above relevant factors, the financial manager will conclude whether or not to prosecute the matter, contemplating on the consequences of this course of action (APES 110, 2011). In general, the accountancy profession is very much regulated, mainly by Codes of Conduct. However, the possibility of such frauds occurring cannot be overlooked and must be noted as one of the risks that have got to be effectively managed besides other business risks or potential adverse occurrences. Yes, applying efficient and stout control systems can cut the risk that fraud ensues or is not noticed but cannot abolish the possibility of fraud going on. This calls for continuous fraud risk management. There exist a number of risk management principles and tools to be used in the continuous assessment of fraud risks. These systems make up the first line of guard counter to unethical conduct given that they put forward a proactive approach to abolishing such risks. The ongoing fraud risk management process is captured in a four-phase approach: Assess – Design – Implement – Evaluate (Banks, 2010). According to Banks and Gallagher (2008), successful fraud risk management strategies and actions are best thought of in three elements: I. Prevention If the health centre is committed to ensuring such fraud do not occur it has got to design proactive measures to help cut the risk of such fraud from occurring in the first place. The strongest preventive strategies that can be implemented include: Developing a Code of Conduct and a fraud control policy and plan that will cultivate an ethical culture within the health centre Raising awareness among the staff regarding fraudulent activities and training them Institute strong internal control procedures II. Detection Preventive measures do not offer absolute protection counter to fraud. The health centre should have systems that can uncover incidents of fraud in a timely manner. Such strategies include: Whistle blower systems Auditing and monitoring Proactive forensic data analysis III. Response As soon as such a fraud is detected, it has got to be raised and properly reported so that corrective action can be taken and remedy the damage instigated by the fraud. Such measures include: Internal investigation systems Follow-up systems Enforcement and accountability In addition, broad safeguards are put together into internal control measures to form a setting open from such fraud. These safeguards are classified under two broad categories: (a) Safeguards created by the profession or regulation Education and training on ethics and professional duties Continuing education and training on ethics Professional standards and conduct Professional competency and experience Corporate governance regulations Professional/regulatory monitoring and disciplinary procedures Professional resources, such as hotlines, for consultation on ethical issues (b) Safeguards at work Oversight systems Strong internal controls. Proper corrective processes. Consultation policies and procedures Stress on the importance of complying with the fundamental principles Quality control engagements The organisation’s ethics and conduct programs. Staffing procedures in the organisation that give emphasis to the importance of hiring skilled staff. Ethical leadership that underscores the reputation of ethical behaviour and the prospect that workforces will act ethically. Procedures and measures to implement and observe the excellence of worker performance. Well-timed communication of the hiring organisation’s procedures and measures, together with any modifications to them, to all workers besides suitable teaching and instruction on such procedures and measures. Procedures and measures to sanction and inspire personnel to talk to high-ranking levels within the hiring organisation any moral matters that worry them devoid of fear of revenge. The Australian health system has evolved overtime. The main events include the introduction of Medicare in October 1984 by the then Health Minister, Dr Neil Blewitt. The defining feature of Medicare was that “basic healthcare should be the right of every Australian”. The Australian Government bared the duty for the primary health care of individuals, through funding general practitioners through Medicare. The States and Territories were responsible for Community healthcare through Medicare Block Grants. Come early 1990’s the Government set up the Divisions of General Practice to sanction General Practitioners to work with other health professionals and to drive better-quality service delivery at the local levels (Eccleston, 2008). In 2008 the National Healthcare Agreement between the States and Territories was introduced to address the maintenance of primary health care service levels. In 2011 the Australian Government established Medicare Locals. The Government is currently investing $1.8 billion so that Medicare Locals can deliver after hours GP services , immunisation, mental health support and other services for those in need in local communities (Duckett & Willcox, 2012). According to Duckett and Willcox (2012), the summary funding to the Australian Health Care System is comprised as follows; Commonwealth Government 43% State and Local Government 26% Individuals 17% Insurers 8% Other Sources 6% The distribution of this funding is 30% to Public hospitals, 8% to private hospitals, 19% to medical services, 6% to dental services, 14% to pharmaceuticals and the remainder being shared between research, administration and other community and health services. This chronology presents a summary of the Australian Health Reform. Therefore, National Health Reform refers to the modifications to the administration, funding and delivery of the Australian health care system Duckett & Willcox, 2012). I consider that National Health Reform should entail the following key items: I. Reforming the basic Australian health system and hospitals, together with funding and governance, to offer a foundation that can be maintained to offer improved services today as well as in the future. II. Change in the manner in which health services are offered, by way of improved right to use high quality cohesive care planned around the requirements of patients, plus a greater emphasis on prevention, prompt intervention and providing of care out of hospitals. III. Offering improved care and access to services for patients, through bigger investments to run better hospitals, better infrastructure, as well as additional doctors and nurses. The National Health Reform should entail a vital adjustment in the health care system in Australia. The wish for the reforms is to make sure that the public health system takes care of the requirements of the local people, to keep up standards of care and quality, and to guarantee transparency and sustainability in the entire funding (Banks & Gallagher, 2008). Independent Hospital Pricing Authority (IHPA) The IHPA is an independent Commonwealth constitutional body established under the Financial Management and Accountability Act 1997 (FMA Act). The body is governed by (1) a Chairperson appointed by the Commonwealth; (2) a Deputy Chairperson appointed by the States; and (3) five members to be agreed by the Council of Australian Governments (COAG); at least one member should have regional and rural expertise National Health Reform Agreement (NHRA, 2011). According to NHRA (2011), the IHPA is mandated to perform two key functions: (a) Determinative functions; and (b) Advisory functions. (a) Determinative functions i. Develop and lay down nationwide categorisations to be used to categorise activities in public hospitals for the purposes of activity based funding (ABF); ii. Decide the supportive data requirements and data standards relating to data to be delivered by states, together with: (1) data and coding standards to back up even provision of data; and (2) patient demographic characteristics plus other information required to classify, cost and pay for public hospital functions; iii. Stipulate costing data, techniques and criteria to be used in studying the costs of providing public hospital services, and to gather such data from Local Hospital Networks, over the States, so that it can compute the national efficient price as well as loadings; iv. Fix the national efficient price for services offered on an activity basis in public clinics over and done with empirical examination of data on authentic activities and costs in public hospitals, considering any time lag plus the cost weights to be applied to particular categories of services; v. Fix the national efficient cost of services in case on a block funded basis in public hospitals over and done with empirical examination of data on authentic activities and costs in Australian public hospitals, allowing for any time lag; vi. Develop, improve and maintain systems required to compute the national efficient price, as well as defining categorisations, costing, data elements and data pools; vii. Define changes (‘loadings’) to the national efficient price essential to make an allowance for appropriate and inevitable deviations in the costs of offering services, comprising those compelled by hospital size, type and location; viii. Develop estimates of the national efficient price for a four year period, updated annually and provide stable reports on these estimates to the Commonwealth and States; ix. Determine what extra services offered by public hospitals qualify for a Commonwealth funding support; x. Define the Block Funded Criteria to be applied to chosen hospitals, functions and services fitting that system every three years. Ahead of making such a determination, the Block Funding Criteria has got to be validated by COAG; and xi. Resolve cross-border disputes, where parties cannot reach a consensual agreement and either party strives for a resolution from the IHPA. (b) Advisory functions. i. Advice COAG on a generally stable meaning and typology of public hospitals entitled to: (1) Block funding alone (comprising minor rural along with regional hospitals well-funded in that fashion); and (2) Mixed ABF and block funding; ii. Make recommendations to the Treasurer to fine-tune Commonwealth contributions to apply cross-border recommendations under clause A97; iii. Advice the Standing Council on Health on the viability of transitioning money for schooling, training and research to ABF or other apt arrangements (referred to in clause A49) by no later than 30 June 2018; and iv. Make an evaluation relating to cost-shifting in line with clauses A99-A101. (c) Other functions According to NHRA (2011), the IHPA has other additional functions apart from the determinative and advisory functions that include: i. Enhance the determination of public hospital services qualified for a Commonwealth funding support (referred to in clause B3 (i)) as directed by the Standing Council on Health. ii. Expand transparency by publicly reporting on: (1) ABF, together with the publication of countrywide stable categorisations, costing techniques as well as data and efficient prices; (2) its counsel regarding block funding and the foundation of that counsel; and (2) its conclusions and ancillary examination on cost-shifting as well as cross-border disputes raised by parties to the Agreement, after meeting with the relevant authorities. iii. Make available draft copies of its reports to all governments ahead of releasing them to the public. Every government is allowed 45 calendar days to make observations on the reports. iv. Embark on data collection and analysis, as well as authorising others to carry out detailed studies and research. In carrying out its mandate, the IHPA is required to (1) openly request for suggestions from interested parties every year; (2) honour any proposals from governments notwithstanding the time they are prepared; and (3) draw on appropriate capabilities and best practice in Australia and all over the world. 1. National Health Performance Authority (NHPA) The NHPA is an independent Commonwealth constitutional body established under the FMA Act. The body is governed by (1) a Chairperson appointed by the Commonwealth; (2) a Deputy Chairperson appointed by the States; and (3) five members to be agreed by the COAG; at least one member should have regional and rural expertise (NHRA, 2011). According to NHRA (2011), the NHPA is mandated to perform the following functions: I. According to the Performance and Accountability Framework, the NHPA is required to: a) Deliver clear and transparent trimestral public reporting of the performance of every one Local Hospital Network, the hospitals contained by it, every one private hospital and each Medicare Local, over the fresh Hospital Performance Reports as well as Healthy Communities Reports b) Observe the performance of Local Hospital Networks, Medicare Locals as well as hospitals counter to these performance procedures and criteria so as to categorise: i. Local Hospital Networks, Medicare Locals and hospitals that perform well and expedite sharing of novel and operative practices; and ii. Local Hospital Networks and Medicare Locals performing below par to support with performance management undertakings; c) Come up with supplementary performance indicators once required, at whichever time requested by the Commonwealth Health Minister at the call of COAG; and d) Maintain the MyHospitals website. II. The NHPA is responsible for conducting comparative studies across Local Hospital Networks and Medicare Locals and identify best practice. References Accounting Professional & Ethical Standards Board (APESB) 110, (2011), APES 110 Code of Ethics for Professional Accountants, available from, . Accounting Professional & Ethical Standards Board (APESB), (2014), Issued Guidance Notes, available from . American Institute of Certified Public Accountants (AICPA), (2014), AICPA of Code of Professional Conduct, available from, . Banks, S. (2010), ‘Interprofessional Ethics: A Developing Field? Notes from the Ethics & Social Welfare Conference’, Sheffield, UK, May 2010, Ethics and Social Welfare, 4:3, 280-294, DOI: 10.1080/17496535.2010.516116 Banks, S. and Gallagher, A. (2008), Ethics in Professional Life: Virtues for Health and Social Care, Palgrave Macmillan, Basingstoke. Duckett S and Willcox S, (2012), The Australian Health Care System, Oxford University Press. Eccleston, (2008), 'Righting Australia's Vertical Fiscal Imbalance: Transferring Public Hospital Funding as an Option for Reform', 15(3): 39-52. Health.nsw.gov.au, (2014), The NSW Health Performance Framework , The Chattered Institute of Public Finance & Accountancy (CIPFA), (2011), CIFPA Standard of Professional Practice on Ethics, available from, . The Chattered Institute of Public Finance & Accountancy (CIPFA), (2002), Standards of Professional Practice (SOPP), available from, . National Health Reform Agreement (NHRA), (2011), National Health Reform Agreement, . Read More