AN INQUIRY INTO THE ACCOUNTING PRINCIPLES AND REPORTING PRACTICES FOLLOWED BY SELECTED STATE UNIVERSITY HOSPITALS

Because of their unique position as component units of other governmental organizations, the accounting and reporting practices of hospitals owned and operated by state supported university medical centers have been subject to several conflicting guidelines.;The research included case studies of five university hospitals designated as Alpha, Beta, Gamma, Kappa and Omega. Data were collected by questionnaires, personal interviews and analysis of financial reports.;The study found that the five hospitals did not issue their own financial statements and that the hospital financial information shown on the combined medical center financial statements was very limited and condensed and did not follow the recommendations of the Hospital Audit Guide.;The analysis of the case studies included recasting the income statements of the five hospitals as separate statements, based on Medicare reports and estimates, to illustrate how separate financial statements would help achieve the objectives of FASB Concepts Statement No. 4.;The purposes of this study were to investigate the accounting and reporting practices of selected university hospitals, to determine the deviations between their practices and the principles recommended by the American Institute of Certified Public Accountants' Hospital Audit Guide and other guides, and to recommend changes that should be made by these hospitals to achieve the objectives for financial reporting by nonbusiness organizations as stated by FASB Concepts Statement No. 4 and the National Council on Governmental Accounting Concepts Statement 1.;Based on this analysis, it was recommended that the university hospitals should follow the Hospital Audit Guide and prepare and report their own financial statements to achieve the objectives of the Financial Accounting Standards Board's Concept Statement No. 4. These financial statements could then be combined as a component of the medical center reports which could be combined with the state reports, as recommended in the National Council on Governmental Accounting's Statements 3 and 7.