I would like to know that what are books of accounts to be prepared for a hospital and how the audit to be performed in the hospital as per the records maintained by the hospital.
I want to know the books of accounts to be maintained as per the companies Act and as per the Income Tax Act.
02 June 2011
Can any one please help me in this regard for the question i posted on 25th May regarding Accounts preparation and Audit of a Hospital. Kindly help me in this regard.
14 July 2024
Managing the books of accounts for a hospital involves specific considerations due to the nature of services provided and regulatory requirements. Here’s a breakdown of the books of accounts typically maintained by hospitals as per the Companies Act and the Income Tax Act, along with an overview of the audit process:
### Books of Accounts as per Companies Act:
1. **Cash Book:** - Records all cash receipts and payments.
2. **Bank Book:** - Records all bank transactions, including deposits, withdrawals, and transfers.
3. **Purchase Register:** - Records all purchases of medicines, medical supplies, equipment, etc.
4. **Sales Register:** - Records all revenues from patient services, surgeries, consultations, etc.
5. **Ledgers:** - Patient Ledger: Tracks individual patient accounts receivable and payments. - Creditor Ledger: Tracks amounts payable to suppliers. - General Ledger: Summarizes all transactions categorized by accounts.
6. **Inventory Register:** - Maintains records of medical supplies, medicines, and other inventory items.
7. **Fixed Assets Register:** - Records details of all hospital assets, including acquisition cost, depreciation, etc.
8. **Income and Expenditure Statement:** - Summarizes revenue earned and expenses incurred during a specific period.
9. **Balance Sheet:** - Provides a snapshot of the hospital’s financial position, listing assets, liabilities, and equity.
### Books of Accounts as per Income Tax Act:
1. **Income Statement (Profit and Loss Account):** - Reports the hospital’s income and expenses for the financial year.
2. **Balance Sheet:** - Shows the hospital’s financial position at the end of the financial year.
3. **Cash Flow Statement:** - Summarizes cash inflows and outflows during the financial year.
### Audit Process:
1. **Statutory Audit:** - Conducted by a Chartered Accountant (CA) to verify and validate the hospital’s financial statements. - Ensures compliance with the Companies Act and other applicable laws. - Reviews the accuracy of financial records, transactions, and disclosures.
2. **Internal Audit:** - Conducted by internal auditors appointed by the hospital management. - Reviews internal controls, operational efficiency, and compliance with policies. - Identifies areas for improvement and risk mitigation.
3. **Tax Audit (under Income Tax Act):** - Mandatory if the hospital’s turnover exceeds specified limits. - Conducted to ensure compliance with income tax laws and regulations. - Focuses on verifying income, expenses, deductions, and tax liabilities.
### Conclusion:
Proper maintenance of books of accounts as per the Companies Act and the Income Tax Act is essential for hospitals to ensure transparency, compliance, and effective financial management. Audits, both statutory and internal, play a crucial role in verifying the accuracy of financial records and ensuring adherence to regulatory requirements. Hospitals should employ robust accounting systems and procedures to facilitate smooth audits and maintain financial health.
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