The Role of Accounting in Health Service Organizations
Meiryani, Dianka Wahyuningtias, Pariang Siagian and Silvia Dewiyanti
Institute Accounting Department, Faculty of Economics and Communication, Bina Nusantara University,
Jakarta, 11480, Indonesia
Keywords: Decision Making, Accounting, Health, Service, Organizations.
Abstract: Accounting is very necessary for the parties concerned as a source of information in helping to make
decisions. Information is needed in making health service organization decisions. The usefulness of
information is to increase user knowledge or ability, reduce uncertainty in the decision making process, and
describe the state of things or events that occur. Accounting information as a basis for business decision
making in health care organizations. One function of accounting is to communicate economic information,
namely the economic reality of an organization. In this study, researchers wanted to find out exactly how
accounting information was used by health service organizations in developing their business.
1 INTRODUCTION
Accounting has become an inseparable part in the
trade and management system of a business unit and
the life of mankind (Amirya et al., 2012a).
Accounting information can be a reliable basis for
economic decision making in company management,
including market development decisions, pricing and
others (Amirya et al., 2012b). Without an accounting
department, it is impossible for an organization to
operate in a cost-effective way. Generally Accepted
Accounting Principles (GAAP) are a set of
accounting principles, standards, and general
procedures used by business organizations in
preparing financial statements. Simply stated, GAAP
is a common method used to record and report
accounting information (Amirya et al., b). The
application of accounting rules will follow
accounting standards or policies in each country. RS
Foundation, for example, will present financial
reports referring to the Financial Accounting
Standards / SAK through PSAK 45 (Astutiningrum.
et al., 2014). Likewise the government HOSPITAL
must refer to Government Accounting Standards
(SAP) other related rules
Accounting also functions as an information
system that generates reports to parties concerned
with economic activity and company conditions
(Carruthers, 2012), for example to find out the back
and forth of a company can be seen from the
company’s financial statements (Creswell, 2015). In
addition, accounting also functions as a basis in
calculating a company’s tax and can be used as a
material consideration for investors who want to
invest their assets (DiMaggio and Powell, ). So in
other words accounting is a reflection of a company.
Accounting collects and processes company
transaction data to fulfill several things such as:
• The need for external parties for financial
information relating to the company and
compliance with statutory provisions.
• Internal or management needs for information
needed to plan, carry out and control company
operations.
Sections in accounting such as bookkeeping and
financial statements provide various information
about various kinds of financial transactions that
occur in the company (Hansen and Mowen, 2012).
The types of health organizations in Indonesia, some
of which are:
• Central government health organizations
• Local government health organizations
• Hospitals, clinics and health centres
• Technical implementation unit
• Private health organizations
Benefits of Accounting for Companies:
• Management is an internal party that is
directly related and urgently needs financial
information to control, coordinate, and plan.
158
Meiryani, ., Wahyuningtias, D., Siagian, P. and Dewiyanti, S.
The Role of Accounting in Health Service Organizations.
DOI: 10.5220/0011242100003376
In Proceedings of the 2nd International Conference on Recent Innovations (ICRI 2021), pages 158-163
ISBN: 978-989-758-602-6
Copyright
c
 2022 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved

External parties that have a direct relationship
with the company, including investors (owners),
creditors, customers, employees, and the community.
They are interested in corporate financial information
with different benefits, including:
• The owner’s interest is to determine the
attitude of holding shares or releasing them.
• Creditors’ interest in deciding credit to
companies can be extended or enlarged.
• Customers (customers) have an interest in
evaluating business relations with the
company.
• Employees have an interest in knowing the
rights that can be obtained from the company.
• The general public has an interest in the
general and social aspects of the company.
• The company and various institutions under its
control need information on the allocation of
resources. This information is used to
determine the company’s activities, determine
tax policies, and as a basis for preparing
national income statistics.
Health service organization is an organization
whose main activity is to provide health services to
the community with one of the goals to be achieved
is to provide quality or quality health services
(Harrison et al., 2012). Health service organizations
such as community health centers, hospitals,
integrated service centers and so on.
2 LITERATURE REVIEW
UU no. 36 of 2009 health development aims to
increase awareness, willingness, and ability to live
healthy for everyone in order to realize the highest
degree of public health, as an investment for the
development of human resources that are socially and
economically productive (Harrison et al., 2012).
Health accounting is an activity that cannot be moved
by a series of management activities, both in the form
of complete and simple accounting. The objectives of
health accounting in health organizations are:
• Provide information needed to manage the
organization appropriately, efficiently, and
economically;
• Provide information that allows the
management of the organization to report the
implementation of responsibilities.
Health accounting is an activity that cannot be
moved by a series of management activities, both in
the form of complete and simple accounting. The
objectives of health accounting in health
organizations are:
• Provide information needed to manage the
organization appropriately, efficiently, and
economically;
• Provide information that enables the
management of the organization to report the
implementation of responsibilities.
The measurement parameters for the success of
health organizations include; the amount of allocation
of funds obtained, an increase in the degree of public
health, the number of people served, and overhead
costs that can be minimized (Susandi et al., 2017).
Health organizations must be able to calculate
economic costs and social costs, this causes
accounting to be accepted as a science needed to
manage health affairs. The purpose of financial
statements is to provide information regarding
financial position, performance, and changes in the
company’s financial position that are useful for users
in economic decision making. Components of health
financial statements include (Juwenah and Astuti,
2016): balance sheet, income statement, statement of
changes in equity, statement of cash flows, and notes
to the financial statements. With the principle of
measuring the success of health organizations that
includes, the amount of allocation of funds obtained,
increasing the degree of public health, the number of
people served and overhead costs that can be
minimized, is expected to improve the performance
of health organizations. All the community has the
right to get good service, without there is a difference.
2.1 Scope of Health Organization
Accounting is the process of identifying, measuring,
recording, reporting economic transactions of an
organization that is used as information in the context
of economic decision making by those who need it
(Susandi et al., 2017). Health organizations use
several parameters as a measure of success among
others: the number of people served and the overhead
that can be minimized. Health accounting is an
activity that cannot be moved by a series of
management activities, both in the form of complete
and simple accounting. The objectives of health
accounting in health organizations are:
• Provide information needed to manage the
organization appropriately, efficiently, and
economically.
• Provide information that allows the
management of the organization to report the
implementation of responsibilities.
The Role of Accounting in Health Service Organizations
159

2.2 Health Services Organization
Health service organizations are institutions or legal
entities whose operational activities are providing
health services and producing drugs.
• The hospital is an integral part of a social and
health organization with the function of
providing plenary, curative and preventive
health services to the community, as well as
the outpatient services it provides to reach out
to their families at home, as well as outpatient
services.
• Puskesmas is a functional health organization
that provides comprehensive and integrated
services to the community in its working area
in the form of basic health services and carries
out community participation and health
development efforts in certain work areas.
• Polyclinic/joint doctor practice is an
institution or organization consisting of
several health workers who work and open
health care practices under one roof, including
drug delivery services, health consultation
services, and health inspection services
• The practice of an individual doctor is a type
of health service that consists of a doctor
accompanied by several health workers who
work in opening public health service
practices that aim at organizing health services
for the community at large, which includes:
health consultations, medical examinations,
provision of medicines, and provision of
follow-up referrals medical treatment for
patients who need it.
• Pharmacy is a form of public health service
that provides services in the form of drug
sales.
2.3 Health Financial Report
The purpose of financial statements is to provide
information regarding financial position,
performance, and changes in the company’s financial
position that are useful for users in economic decision
making (Triyuwono and Wittig, 2009). Components
of health financial statements include: balance sheet,
income statement, statement of changes in equity,
statement of cash flows, and notes to the financial
statements. Reference to the preparation of hospital
financial statements:
• Capital market regulatory body regulations
relating to accounting and financial
statements;
• The basic framework for the preparation and
presentation of financial statements, PSAK,
and PSAK interpretations;
• International accounting standards, statements
of financial accounting standards,
international public sector accounting
standards, international financial reporting
standards;
• Regulations relevant to financial statements.
2.4 Cycles and Elements of Health
Financial Reports
The accounting cycle is the process of providing an
organization’s financial statements for a certain
period. The stages are: recording, ending and
reporting. Elements of health organization financial
statements include:
• Elements of the statement of financial position
(balance sheet) health, is a report that provides
a complete picture of the entity at the point in
time, its components: assets and liabilities of
equity.
• The health and loss/surplus/defisit statement
element is a report that describes the financial
performance of an entity in an accounting
period, its components of revenue, costs,
surplus, deficit.
• The health cash flow statement element is a
report that describes changes in cash position
in an accounting period, its components are
cash flows from operating, investing and
financing activities.
2.5 Analysis of Health Performance
Performance indicators are quantitative and
qualitative measures that describe the level of
achievement of goals.
3 RESULT AND DISCUSSION
The purpose of financial statements is to provide
information regarding financial position,
performance, and changes in the company’s financial
position that are useful for users in economic decision
making. Components of health financial statements
include: balance sheet, income statement, statement
of changes in equity, statement of cash flows, and
notes to the financial statements. Reference to the
preparation of hospital financial statements:
ICRI 2021 - International Conference on Recent Innovations
160

• Capital market regulatory body regulations
relating to accounting and financial statements;
• The basic framework for the preparation and
presentation of financial statements, PSAK,
and PSAK interpretations;
• International accounting standards, statements
of financial accounting standards, international
public sector accounting standards, interna-
tional financial reporting standards;
• Regulations that are relevant to the financial
statements.
3.1 Cycles and Elements of Health
Financial Reports
The accounting cycle is the process of providing an
organization’s financial statements for a certain
period. The stages are: recording, ending and
reporting. Elements of health organization financial
statements include:
• Elements of the statement of financial position
(balance sheet) health, is a report that provides
a complete picture of the entity at the point in
time, its components: assets and liabilities of
equity.
• The health and loss /surplus/defisit statement
element is a report that describes the financial
performance of an entity in an accounting
period, its components of revenue, costs,
surplus, deficit.
• The health cash flow statement element is a
report that describes changes in cash position
in an accounting period, its components are
cash flows from operating, investing and
financing activities.
3.2 Health Cost Accounting
Cost accounting is the process of determining full
costs and additional costs for service providers and
goods for patients and the community. The cost
accounting process includes:
• External parties (external), namely meeting
the characteristics of financial accounting
which are part of financial accounting
• Internal parties, namely meeting management
accounting characteristics that are part of
management accounting
3.3 Health Organization Cost
Accounting Methods
Basic measurement of input (input):
• Pure historical financing: historical costs only
flow through the inventory account and show
all costs that have been recorded, while actual
costs represent the inventory used.
• Normal historical financing: using historical
costs, especially BBL and TKL, in this case
overhead is assessed by activity-based
predetermined overhead rates.
• Calculation of standard costs, all processing
costs are applied or valued to inventories using
predetermined prices and standard quantities.
3.4 Inventory Valuation Method
Application of health cost accounting system:
• Throughput method: in this method only BBL
is included in inventory while other costs are
incurred during a certain period. This method
is incompatible with GAAP and is not
accepted for external reporting.
• Direct or variable methods: in this method
only variable manufacturing costs are
included in inventory. Although there are
benefits and disadvantages to external
reporting and no adjustments, direct costs are
specifically received in external reporting.
• Full absorption method: refers to the
calculation of the full cost and the absorption
cost calculation, which is the traditional
method where all manufacturing costs are
included in inventory. This method is often
used in internal reporting.
• Activity based methods: provide accurate
product costs, by tracking costs to products
through activities or by describing the
resources needed for the activities and
activities required by the product.
3.5 Health Activity Financing System
3.5.1 Analysis of Service Costs and Unit
Cost Calculations
The main accounting review focuses on the validity
and reliability of financial reporting and the
efficiency and effectiveness of operations.
3.5.2 Market Analysis
The grand design of the institutionalization of cost
calculation is an effort to civilize the cost calculation
process with the aim of achieving the level of
efficiency expected to be costing includes tracking
the collection of costs to the cost object and allocating
The Role of Accounting in Health Service Organizations
161

a set of costs for which there is an object cost. Costs
can be divided into three, namely:
• Fixed costs: costs whose total amount is
affected by changes in organizational activities
and unit costs. Example director’s salary.
- Committed fixed cost: fixed costs
incurred because of past decisions and
related to long-term operations. Example:
depreciation costs, insurance costs.
- Discretionary fixed cost: costs arising
from the decision to make a budget
regularly. Example: research and
development costs.
• Variable costs: costs whose total amount is
affected by changes in activities and unit costs
do not change even though activities change.
Example: raw material costs, BTKL.
• Semi Variable costs: costs that have fixed and
variable elements. There are two semi variable
costs, both direct and indirect.
3.6 Health Service Financing Methods
3.6.1 Retrospective Payments
Retrospective payments are payments that are
approved and made after the service has been
performed.
• Fee for service payments per item: patients or
funders pay in full to the health care provider
after the service is completed
• Fee for service payment-payment per day:
uniting all services performed daily so that
payments are made in a lump sum for each day
when staying.
3.6.1 Prospective Payments
Prospective payment is agreed payment and is carried
out further before the provision or service is made
regardless of the accrual costs incurred by the health
service provider.
• Capitation payments, made in fixed amounts
per person for a certain period of time, usually
one year
• Payment with a global budget, health service
providers are given a budget, usually at the
beginning of the year, to cover all available
services.
3.7 Health of Organizations
The measurement parameters for the success of health
organizations include; the amount of allocation of
funds obtained, an increase in the degree of public
health, the number of people served, and overhead
costs that can be minimized. Health organizations
must be able to calculate economic costs and social
costs, this causes accounting to be accepted as a
science needed to manage health affairs. Thus the
nature of health organizations in accounting aspects
is related to:
• The purpose of organization; Improving the
community’s health status independently,
integrated, and competitive in a conducive and
healthy environment.
• Sources of Funding; government budgets,
service user community contributions,
allocation of foundation/owner/donation funds.
• Accountability; the health organization is
responsible for the body that houses it.
• Accounting System; accounting is influenced
by the diagnosis mechanism of related groups
(DRG) and the strength of competition
(referring to managed care).
3.7.1 The Purpose of Accounting in Health
Organizations
• Provide information needed to manage the
organization appropriately, efficiently, and
economically regarding the activities and
allocation of resources entrusted to the
organization (management control);
• Provide information that enables the
organization’s managers to report the
implementation of management
responsibilities appropriately and effectively
along with the use of the resources under their
authority to the public or the institution
responsible for them (accountability).
3.7.2 The Benefits of Accounting in Health
Organizations
• Guidelines for decision making, especially
resource allocation, determination of program
costs, determination of service rates, standard
service costs;
• Assist the selection and binding of effective
and efficient service activities.
3.8 Health Financial Statements
Provide an overview of the company’s financial
position, performance, changes in equity, and cash
flow that is beneficial for most users of the report in
ICRI 2021 - International Conference on Recent Innovations
162

order to make economic decisions and show
management’s responsibility for the use of resources
entrusted to it. In detail, the objectives of the financial
statements are:
• Making investment and credit decisions;
• Assess the prospect of cash flows (operational,
investment and financing);
• Information on company resources, claims for
those resources, and their changes.
4 CONCLUSION, SUGGESTIONS
AND LIMITATION
Measures of success of health organizations include;
the amount of allocation of funds obtained, an
increase in the degree of public health, the number of
people served, and overhead costs that can be
minimized. Health organizations must be able to
calculate economic costs and social costs, this causes
accounting to be accepted as a science needed to
manage health affairs. The objectives of accounting
in health organizations such as: (1) provide
information needed to manage the organization
appropriately, efficiently and economically regarding
the activities and allocation of resources; (2) provide
information for managers to report the
implementation of management responsibilities
appropriately and effectively. Components of health
financial statements include: balance sheet, income
statement, statement of changes in equity, statement
of cash flows, and notes to the financial statements.
REFERENCES
Amirya, M., Djamhuri, A., & Ludigdo, U. 2012a. Budget
and Accounting System Development
Universitas Brawijaya Public Service Agency:
Institutionalist Perspective. Accounting journal.
Multiparadigma, 3 (3), 343‾ 356. From http://jamal.ub.ac.
id/index.php/jamal/article/view File / 193/194.
Amirya, M., Djamhuri, A., & Ludigdo, U. 2012b. Budget
and Accounting System Development Universitas
Brawijaya Public Service Agency: An Interpretative
Study. Symposium National Accounting XV
Banjarmasin 2012. From http://sna.akuntansi.unikal.
ac.id/makalah/060 – ASPIA – 01.pdf.
Astutiningrum., Djamhuri, A., & Prihatiningtias, Y. W.
2014. New Institutional Theory: Implementation of
Performance-Based Budgeting Towards Competitive
Organizations and Market Oriented. Journal of
Accounting and Financial Review, 4 (2), 595‾ 606.
From http://ejournal.umm.ac.id/index.php/jrak/article/
view/4944.
Carruthers, Bruce G. 2012. Institutional Dynamics: When
is Change "Real Change" ?. Working Paper Series, 12–
004. From http://buffett.northwestern.edu/documents/
working–papers/CHSS – 12–004 – Carruthers.pdf.
Creswell, John W. 2015. Qualitative Research & Research
Design: Choosing Among the Five Approaches,Issue 3
(Saifuddin Zuhri Qudsy, Ed). Translation of Ahmad
Lintang Lazuardi. Yogyakarta:Student Library. 2013.
DiMaggio, P. J. & Powell, W. W. 1983. The Iron Cage
Revisited: Institutional Isomorphism and Collective
Rationality in Organizational Fields. American
Sociological Review, 48 (2), 147‾160. From
http://www.ics.uci.edu/~corps/phaseii/DiMaggioPowe
ll–IronCageRevisited–ASR.pdf.
Hansen, D. R. & Mowen, M. M. 2012. Managerial
Accounting, Issue 8: Managerial Accounting, 8th
Edition (Lulu Alfiah, Ed). Deny Arnos Kwary's
translation. Jakarta: Salemba Empat. 2007.
Harrison, W. T., Horngren, C. T., Thomas, C. W., &
Suwardy, T. 2012. Financial Accounting, Edition8:
Financial Accounting, 8th Edition (Suryadi Saat, Ed).
Gina Gania translation. Jakarta:Erlangga Publisher.
2010.
Romney, M. B. & Steinbart, P. J. 2015. Accounting
Information Systems, Issue 13: Accounting
Information Systems, 13th Edition (Muhammad
Masykur & Bambang Hernalyk, Eds).
Kikin Sakinah Translation Nur Safira & Novita Puspasari.
Jakarta: Salemba Empat. Rosnidah, I.,
Juwenah. & Astuti, A. D. 2016. Identification of Existing
Regional Public Service Agency Accounting System at
Cirebon District Regional General Hospital. Journal of
Accounting and Financial Research, 4 (2), 993‾ 1004.
From http://ejournal.upi.edu/ index.php / JRAK / article
/ view / 4033.
Susandi, N. T., Budiartha, K., & Suprasto, H. B. 2017.
Financial Performance and Efficiency of Internal
Processes Before and After the Implementation of PPK
– BLUD in Klungkung District Hospital. E – Journal of
Economics and Business, Udayana University, 6 (4),
1701‾ 1730. From http://ojs.unud.ac.id/index.php/EEB/
article/view/27076/18198. Syahril. 2013. Financial
Management Pattern of Regional Public Service Bodies
(PPK-BLUD) at Dr. H. Moh. Anwar Sumenep. Journal
of "Performance" Business and Accounting, 3 (1), 31‾
50. From https://ejournal.wiraraja.ac.id/index.php/
FEB/article/download/113/84.
Triyuwono, Iwan. 2009. Sharia Accounting Perspectives,
Methodologies and Theories. Jakarta: Rajawali Press.
Wittig, Cynthia. (2012). Employees' Reactions to
Organizational Change. OD Practitioner, 44 (2), 23‾ 28.
From http://c.ymcdn.com/sites/www.odnetwork.org.
http://cescmizcovolt.blogspot.com/2012/09/accounting-
organizational-hospital.html
http://garisbuku.com/shop/akuntansi-k Kesehatan/
http://nafidaayuningtyas.blogspot.com/2012/06/accoun
ting-organizational-diversity-dan.html
The Role of Accounting in Health Service Organizations
163