Forms and practices in medical field in india. Accounting aspects Created by me for CA alok shah Vadodara.

1. Workshop
Financial Prescription for Doctors
7TH October, 2012
CA.(Dr.) Alok shah
Partner
Contractor, Nayak & Kishnadwala
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2. 2

3. ACCOUNTING PROCESS
Receipts &
income
Expenses
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4. Books of account and other documents to be kept
and maintained under section 44AA(3)
The books of account and other documents referred to in sub-rule (1) shall be the
following, namely:—
(i) a cash book;
(ii) a journal, if the accounts are maintained according to the mercantile system of
accounting;
(iii) a ledger;
(iv) carbon copies of bills, whether machine numbered or otherwise serially
numbered, wherever such bills are issued by the person, and carbon copies or
counterfoils of machine numbered or otherwise serially numbered receipts issued
by him [ not apply to sum exceeding Rs 25]
(v) original bills wherever issued to the person and receipts in respect of
expenditure incurred by the person or, where such bills and receipts are not issued
and the expenditure incurred does not exceed fifty rupees, payment vouchers
prepared and signed by the person:
[Provided that the requirements as to the preparation and signing of payment
vouchers shall not apply in a case where the cash book maintained by the person
contains adequate particulars in respect of the expenditure incurred by him.]
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5. ACCOUNTING BOOKS TO BE MAINTAINED
 MANDATORY
BOOKS THAT A MEDICAL
PRACTISIONER HAS TO MAINTAIN.:
1. Cash book,
2. Bank book (Bank statements),
3. Daily case(Patient) register,
4. Detailed Salary register,
5. Medicine stock register,
6. Grants and Donations receipt register,
7. Expenses register,
8. Every Books which are necessary to give true and fair
view of the state of affairs of the medical
professionals.
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6. Books that a medical venture has to maintain:
Cash book :
“Cash Book" means a record of all cash receipts and
payments, kept and maintained from day-to-day and
giving the cash balance in hand at the end of each day or
at the end of a specified period not exceeding
a [month];
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7. Types of cashbook
Simple Cash Book
Petty cash book
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8. 2. BANK BOOK
 Bank book is a statement showing all the
transaction routed via bank :
 Bank book consist all the transaction
details like amount, instrument number,
payee, date etc.
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9. Form of Daily case register according to
income tax act: (proforma)
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10. Detailed salary register
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11. Medicine stock register
Track your stocks
Tracking of this removes unnecessary costs
Results in enabling to know exact profit
position
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12. Grants and Donations receipt
register
 If the Hospital having great funding from out side
sources through ‘grants & Donations’ it is better to
have a register to record all such stuff.
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13. It is a great part of the internal
control that all the commercial – non
commercial practice want to under
control
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14. Records
 OTHER
RECORDS THAT ARE REQUIRED TO BE
MAINTAINED:
1. Separate book showing foreign and domestic
contributions,
2. Equipment register,
3. Duties and taxes register,
4. Professional fees register,
5. TPA contract register,
6. Honorarium received-paid register,
7. Details of the services rendered by volunteers for which
no payment has been made,
8. Segment details (own pharmacy, lab ect.) .
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15. Every Books which are necessary to
give ‘
of
the state of affairs of the medical
professionals.
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17. Possible medical practices
1.
2.
3.
4.
5.
6.
SOLE PROPRIETORY (Mostly Clinic)
PARTNERSHIP
LLP
TRUST
PRIVATE LIMITED COMPANY
PUBLIC LIMITED COMPANY
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18. Medical practices
1.
This is a best option for the physician who desires a
degree of management and fiscal control over the medical
practice.
Some hospitals provide an income guarantee and support
to help a new physician set up a practice.
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19. Medical practices
2.
 Partnerships offer more freedom for business owners
with shared business tasks and the potential to earn
greater profits.
 It is simple to set up a partnership because no legal
documents are needed. Partnerships are often an oral
agreement between two or more parties. Potential
problems can be averted down the road by drawing up a
legal partnership agreement.
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20. 3.
LIMITED LIABILITY PARTNERSHIP(LLP
A Limited Liability Partnership (LLP) is a
partnership in which some or all partners have limited
liability.
one partner is not responsible or liable for another
partner's misconduct or negligence. This is an
important difference from that of an unlimited
partnership.
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21. Creating A Winning Business
Partnership
• Have The Same Vision
• Define Business Roles
• Avoid the 50-50 Split
• Hold A Monthly Partner Meeting
• Create A Partnership Agreement
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22. 4.
Medical trust
Trust are the establishment which are
established under Indian trust act, 1882
Every Person capable of holding
property may be a trustee; but, where
the trust involves the exercise of
discretion, he cannot execute it unless
he is competent to contract.
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23. PRIVATE LIMITED COMPANY
 For incorporating a private limited
company :
1.
2.
3.
4.
5.
6.
A minimum of two directors are required and minimum two
shareholders.
The right to transfer shares is restricted as per the articles of
association.
The number of shareholders is limited to fifty.
An invitation to the public to subscribe to any shares or
debentures is prohibited.
No invitation or acceptance of deposits from persons other
than members, directors or their relatives is allowed.
Lesser number of compliance requirements
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24. PUBLIC LIMITED COMPANY
 The company has a separate legal existence apart from
its members who compose it.
 Its formation, working and its winding up, in fact, all
its activities are strictly governed by laws, rules and
regulations. The Indian Companies Act,
1956contains the provisions regarding the legal
formalities for setting up of a public limited company.
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25.  A company must have a minimum of seven members but
there is no limit as regards the maximum number.
 The liability of a member of a company is limited to the
face value of the shares he owns.
 As a company is an independent legal person, its
existence is not affected by the death, retirement or
insolvency of any of its shareholders.
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26. COMPANIES MAY BE IN FOLLOWING SPECIALITIES
SINGLE-SPECIALTY :
 One specialty is represented among physicians who
have agreed to be in practice of any one service
exclusively.
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27. MULTI- SPECIALTY :
 Multi specialty business not just carries multiple medical
services but also specializes in all of the elected services
which they have opted for.
 As name says MULTI , it can have multiple departments
as well as multiple facilities can also be provided by the
aforesaid hospitals.
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28. Allied Health profession
 Generally allied Health profession indicate that they
are health professions distinct from medicine,
dentistry, optometry and nursing.
 Allied Health professional are not typical a
professional so called doctors.
 But they are much benefiter to a medical professional
& and supplementary service providers.
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29. SOME EXAMPLES OF ALIIED MEDICAL SERVICES:
•Clinical officer:
•Diagnostic medical sonographist:
•Dietitian / Nutritionist:
•Dialysis Technologist / therapist:
•Health coach:
•Radiation therapist:
•Orthoptist:
•Pharmacist
•Massage therapist
•Music therapist
Etc,etc.
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31. CASH VS. ACCRUAL ACCOUNTING
• There are basically two methods of
accounting expenses and income.
• One is cash basis and the other is accrual.
• The difference between the two is basically
time.
• With the cash system you only account for an
expense or earning when you actually get the
money or pay it not when you accrue the sale
or expense.
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32.  This can get inaccurate when you are
paying with credit or other ways to
prolong the payment or if you use a
collection service to do your accounts
receivable you only count income when
it actually hits your account not when
you have done the service or given the
product.
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33. THEN WHY CASH FOR DOCTORS ?
 There are two types of businesses that benefit from
a cash system that is Doctors who don't always get
paid for their services and Agricultural businesses
like ranchers or farmers who don't always bring in
the revenue do to weather or other unforeseeable
events. These two businesses would do well to talk
to an accountant about the best method of
accounting for their particular business type.
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34.  Efficient working capital management allows
hospitals to reduce their holdings of current assets,
such as inventory and accounts receivable, which earn
no interest income and require financing with shortterm debt.
 The resulting cash inflows can be reinvested in
interest-bearing financial instruments or used to
reduce short-term borrowing, thus improving the
profitability of the organization.
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35. Internal control
Internal Control is defined as a process
affected by an organization's structure, work
and authority flows, people
and management information systems,
designed to help the organization
accomplish specific goals or objectives.
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36. INTERNAL CONTROL IN
CASH
HOW TO
 Access to funds must be limited to specific person
 Identify custodians
 All adjustments must be documented and approved
 Transfers of funds must be documented
 Funds collected must be balanced
 Funds must be deposited in a timely Manner
 Deposits must be reconciled
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37. INTERNAL CONTROL IN
CASH
HOW TO
 When funds are initially received, the event must be
documented in one of the following ways:
1. Mail logs
2. Cash receipt slips
3. Cash registers
4. Credit card foils
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38. BY : CA.(Dr.) ALOK B. SHAH
CONTRACTOR,NAYAK & KISHNADWALA,
CHARTERED ACCOUNTANTS
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