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A Comparative study of Expenditure Control Method in Government and Privately owned Hospital

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A Comparative study of Expenditure Control Method in Government and Privately owned Hospital
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  A COMPARATIVE ANALYSIS OF EXPENDITURE CONTROLMETHODS IN GOVERNMENT AND PRIVATELY OWNEDHOSPITALCHAPTER ONEINTRODUCTION1.1 BACKGROUND OF THE STUDY Expenditure control or cost control is part of management controlprocess, in every organisation. This process is very important to anyorganisation be it profit making organisation or non-profit makingorganisation. Thus, lack of this practice in any organisation will causemisapplication of cash in cash disbursement process and this will createa very big problem leading the organisation into deficit and at anextreme case, the organisation might wind up. Many researches have been conducted in the reason for winding up of companies andorganisation in which lack of expenditure control process had foundresponsible. Expenditure control has been defined as the process by which managersutilize effectively and efficiently, the scarce resource in the achievementof the organisational goals. At this juncture, let us look at expenditureand control from separate perspective.Expenditure is the total amount spent on the process of trying to achievea particular organisational goal. Control means to order, limit, instruct or  rule something or someone’s actions. It is used by either governmentofficials or organisation managers to make restrictions on wagesincreases, immigrate credit and so on (which are all expenditure). As regards, this research work, which is the comparative study ofexpenditure control methods in government and privately ownedHospitals, A study of the University of Nigeria Teaching Hospital Enugu(UNTH) and Toronto Hospital and Maternity Onitsha; this implies acomparative study of non-profit making organisations, since UNTH isgovernment owned Hospital while Toronto Hospital is privately ownedHospital as a category of profit making organisation. Non-profit makingorganisations are characterized by the following: a.There is neither a conscious profit motive nor an expectation ofearning net income.  b.No profit of any excess of revenue over expenditure is distributedto those who contributed support through taxes and voluntarydonations. In profit making organisations, the reverse of these characteristicsis the case in the sense that their major objective is to maximize profitand excess of revenue over expenditure are given to the owners of theorganisation. Government owned hospitals pay more attention to services they renderto the public, as their major objectives is to provide services that fulfil asocial needs for those who do not have the purchasing power to acquirethese services themselves. Irrespective of the fact that privately owned  hospitals try to render good and quality services to the public, they paymore attention to maximize of profit which their major objective. Comparative study of expenditure control in Government and privatelyowned Hospital which is major research question in this research workhas to with the different ways and methods by which expenditure is being controlled in each of the hospitals so that they will not run intodeficit or liquidations. According to Johnson (1976), the management control concept whichimbibes the expenditure control are the same both in profit oriented andnon-profit oriented organisations, but the implication of these conceptsdiffer in important respect. We will want to find out if also theexpenditure control methods are the same or differ in the two hospitalsunder study, owning to the fact that one is profit oriented and the otheris non-profit oriented. 1.2 STATEMENT OF THE PROBLEM The problems encountered by the Government and privately ownedHospitals in expenditure control are as follows: The problem of daily control method and the vote card method. Theproblem encountered is to know the effective method to use in the twohospitals. Here, the problem encountered is to check whether the dailycontrol method will be efficient and effective in the Government ownedhospitals or whether the vote card method is the best.  Another problem encountered by the hospitals in expenditurecontrol is the problem of internal control. Internal control is the essentialfeature of an organisation, be it profit making or non-profit making, andit is expected to be well managed effectively and efficiently. Anyproblem or limitation of the internal control will pose a problem to theexpenditure control of the organisation. Therefore, the above problems encountered by the two hospitalsare the problems of expenditure control methods encountered by thegovernment and privately owned hospitals by the government andprivately owned hospitals that attracted the attention of the researcher. The problem definition in this research work is to investigate andanalyse the different ways and methods by which expenditure iscontrolled in government owned hospitals and privately ownedhospitals so that they will not run into deficit and liquidation. As acomparative study, two hospitals has been selected for the study, theyare: University of Nigeria Teaching Hospital Enugu (UNTH) forgovernment owned Hospitals, and Toronto Hospital and MaternityOnitsha for privately owned hospitals. In this research, we study the different methods of expenditure control being adopted by these hospitals and their practical application andtheir level of effectiveness. This study will form a basis for our analysis which will help to answersome research questions.  1.3 OBJECTIVES OF THE STUDY This study is conducted to: 1. Ascertain the expenditure control method adopted by the governmentand privately owned hospitals. 2. Establish whether government and privately owned hospitals areoperating the same of different system of accounting. 3. Compare the expenditure method or model adopted by the privatelyowned hospitals with that of the government owned hospital if there is adifference. 4. Ascertain the efficiency and effectiveness of these expenditure controlmethods in the operation of the privately and government ownedhospitals. 5. Make recommendations based on the findings. 1.4 RESEARCH QUESTIONS 1. What expenditure control methods are adopted in the two hospitals? 2. Do privately owned hospitals and government owned hospitalsoperate the same method of expenditure control? 3. Are there any similarities and differences in their method andapplication?
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