New York Codes, Rules and Regulations › Title 10 - DEPARTMENT OF HEALTH › Chapter V - Medical Facilities › Subchapter A - Medical Facilities-minimum Standards › Article 9 - Residential Health Care Facility Uniform Reporting › Part 452 - Basic Concepts, Reporting Principles And Specialized Reporting Areas › Section 452.2 - Basic concepts

Current through Register Vol. 46, No. 28, July 10, 2024
(a)
					 Accounting entity. A fundamental accounting concept is that of the accounting
					 entity or unit. For the purposes of this Article, a residential health care
					 facility is presumed to be an accounting entity, the boundaries of which may
					 not be the same as those of the legal entity. The residential health care
					 facility is the primary unit for which the accounting records are
					 maintained.
(b) Going concern. An
					 accounting entity is viewed as continuing in operation in the absence of
					 evidence to the contrary. The results of operation of an accounting entity are
					 recognized and measured based on this concept.
(c) Reporting period. The economic activities
					 of an accounting entity are measured and accounted for in incremental time
					 periods that are shorter than the life of the entity. The basic reporting
					 period for this Article is one year, commencing on January 1st and ending on
					 December 31st of each year.
(d)
					 Substance over form. Financial accounting is concerned with the economic
					 substance of transactions rather than the legal form of such transactions.
					 Generally, economic substance agrees with legal form. However, in those
					 instances where substance and form differ, the financial treatment for such
					 transactions should be accounted for based on their economic substance to
					 provide more meaningful information of the economic activities of the
					 accounting entity.
(e) Consistency.
					 Consistency refers to continued uniformity, during a period and from one period
					 to another, in methods of accounting, mainly in valuation bases and methods of
					 accrual, as reflected in the financial statements of an accounting entity.
					 However, consistency does not require continued adherence to a method or
					 procedure that is incorrect or no longer useful, nor does it preclude a
					 justifiable and desirable change in accounting and reporting methods or
					 procedures.
(f) Materiality.
					 Materiality is an elusive concept, with the dividing line between material and
					 immaterial amounts subject to various interpretations. It is clear, however,
					 that an amount is material if its exclusion from the financial statements would
					 cause misleading or incorrect conclusions to be drawn by users of the
					 statements.
(g) Functional vs.
					 responsibility accounting.
(1) Normally,
					 financial data is accumulated for operating departments that are identified
					 with specific managerial responsibility. This information provides management
					 with the tools necessary to evaluate the performance of various departments.
					 Recording and reporting financial data in this manner is known as
					 responsibility accounting.
(2)
					 Functional accounting is the process of recording and reporting revenues and
					 expenses on the basis of activities performed without regard to organizational
					 framework. Thus, costs related to a specific activity, normally charged to the
					 organizational unit (department) responsible for that activity, would instead
					 be charged to the cost center whose function is to perform the
					 activity.
(3) Since facilities vary
					 in basic organizational structure and the way responsibilities are organized
					 within departments, this Article mandates reporting on a functional basis in
					 accordance with defined activities of each department to achieve a level of
					 compatibility.