Question

Note: Please be sure to remind us who your employer is. If you are not currently working, please answer the question based on a prior job. If you have never worked, please answer the question based on an organization that is familiar to you such as a pharmacy or a doctor's office.

Expenses

1.  What grouping of expenses do you believe your organization uses? (traditional cost centers; diagnoses/procedures; care settings; other)

2.  From your perspective, would there be a better grouping possible? If so, why do you think it is not used?

Answer 1

Being an auditor for a hospital, I have an understanding about a hospital's books of accounts.

1. The hopital that I worked with used traditional cost centers and certain generic cost centers focusing on activities and nature of the expenses. Major groups were, Salaries, Supplies, Bad debts and respective cost centers like Diagnoses, reports, room rents, etc. The idea was to have a control over all possible cost centers and try to keep it as low as possible. Stakeholders were assigned and reports were evaluated every month.

2.Yes a better grouping would be possible because there is always a scope for improvement. An organisation need to assign roles and responsibilities to ensure that the costs are kept in control and monitored. Expenses should be grouped on the basis of their place in the cycle. So for example, Material related costs shall be clubbed together instead of having it mixed under department heads. Since the approver is the same for all kind of materials and hence he should have control and must be able to monitor each cost.