Title:

A Systematic Literature Review on the Principles of Good Financial Management and Financial
Control in the Context of Changes in Audit Procedures: The Impact of Internal Audit in Public
Hospitals

Abstract:

With a focus on the effects of internal audit in public hospitals, this systematic literature review
investigates the fundamentals of sound financial management and financial control, specifically
in the context of changes in audit procedures. The study's objectives are to present a thorough
grasp of the current state of knowledge, identify important themes, and identify any remaining
research gaps. This review provides insights into the principles that contribute to efficient
financial management and control, as well as the function of internal audit in fostering
accountability and transparency in public hospital settings, by synthesizing pertinent research.
Policymakers, healthcare executives, and auditors can benefit from the study's conclusions by
improving financial governance procedures in the healthcare industry.

Introduction
Background

The efficient and effective use of resources in any organization is dependent on sound financial
management and control. Due to the involvement of public finances and the emphasis on
delivering high-quality healthcare to the community, these values take on even more
significance in the setting of public hospitals. However, because of its complexity, rising
expenses, and need to strike a balance between providing high-quality care and financial
viability, the healthcare industry faces particular difficulties. Strong financial management and
control methods at public hospitals are also crucial, as has been highlighted by improvements in
auditing procedures.

Objectives
This systematic literature review's main goal is to examine the fundamentals of sound financial
management and financial control, particularly in light of evolving auditing standards. The main
objective of this review is to:

a) Identify the important ideas that support efficient financial management and control in
public hospitals.
b) Analyze how modifications to audit procedures affect methods used for financial
management and control.

c) Research how internal audit might help public hospitals foster accountability and openness.

d) Recognize the effects of internal auditing in public hospitals and how it affects financial
management.

Financial Management and Financial Control: Concepts and

Frameworks
Financial Management in Public Hospitals

In order to accomplish the objectives of the organization while assuring sustainability and
accountability, financial management in public hospitals entails strategic planning, monitoring,
and allocation of financial resources. It includes a variety of tasks, such as cost management,
financial reporting, financial planning, and budgeting. In the setting of public hospitals, financial
management is essential to ensuring the community is provided with high-quality healthcare
services.

Budgeting is a crucial component of financial management in public hospitals. A well-crafted

budget enables hospitals to distribute resources wisely, set expenditure priorities, and
anticipate future costs. It includes calculating revenues, planning expenses, and establishing
financial goals that complement the hospital's strategic goals. Hospitals may track their financial
performance and allocate resources wisely with the help of budgeting.

Another crucial aspect of financial management in public hospitals is financial planning. To

ensure the hospital's financial stability and sustainability, it entails creating long-term financial
strategies and projecting budgetary demands. When making financial plans, considerations
including expected revenue sources, capital expenditures, and operating costs are taken into
account. Public hospitals can proactively handle financial difficulties and adjust to changes in
the healthcare environment by setting clear financial goals and strategies.

In order to evaluate the financial stability of public hospitals, financial analysis is essential. To
learn more about the hospital's financial status and performance, it entails examining financial
documents, performance indicators, and financial ratios.

Financial analysis promotes benchmarking to industry norms, supports evidence-based

decision-making, and aids in identifying areas of strength and weakness.
In public hospitals, cost control is a crucial component of financial management. Hospitals must
put mechanisms in place to control costs as healthcare costs rise without sacrificing patient
care quality. Optimizing resource utilization, negotiating advantageous contracts with suppliers,
adopting effective operating procedures, and spotting cost-saving opportunities are all
examples of cost control strategies.

The financial operations of public hospitals are transparent and accountable thanks to financial
reporting. Government authorities, regulatory organizations, and the general public can
evaluate the hospital's financial performance and compliance with financial rules and standards
thanks to accurate and timely financial reporting. Financial reports give details on income,
expenses, assets, liabilities, and cash flows, allowing for efficient control and monitoring.

Financial Control in Public Hospitals

In public hospitals, financial control refers to the systems, processes, and practices put in place
to protect assets, stop financial irregularities, and guarantee adherence to financial regulations
and policies. It seeks to reduce monetary risks, improve accountability, and preserve the
reliability of financial transactions.

Internal control measures must be established in public hospitals for effective financial control.
Internal controls are laws, regulations, and practices created to protect assets, thwart fraud and
poor management, and advance operational effectiveness. Segregation of roles, authorization
and approval procedures, internal audits, and routine financial record reconciliation are some
of these controls.

An essential internal control measure is the segregation of duties, which ensures that no one
person has complete authority over all facets of financial activities. It entails dividing up
accountability for financial tasks like keeping track of transactions, approving spending, and
managing cash. By creating checks and balances, the separation of duties lowers the possibility
of mistakes, fraud, and conflicts of interest.

In public hospitals, authorization and approval procedures are essential to maintaining

budgetary management. The correct recording and examination of financial transactions,
including purchase orders, contracts, and payment requests, are necessary for these
operations. Procedures for authorizing and approving expenditures make ensuring that they are
legal, supported by the right paperwork, and consistent with the established budget.
Internal audits are essential to public hospital financial control. Internal auditors examine the
efficiency of internal controls, determine whether financial rules and regulations are being
followed, and pinpoint opportunities for improvement. Internal audits give management and
stakeholders reassurance about the dependability and integrity of financial information as well
as the efficacy of financial control mechanisms through systematic and independent
assessments.

Financial control in public hospitals must be maintained through routine record reconciliation.
In order to do this, financial data must be compared and matched across various systems and
records, including bank statements, general ledger accounts, and inventory records.
Reconciliation assures the quality and completeness of financial information and assists in
locating discrepancies, mistakes, or fraudulent activity.

A crucial component of financial control in public hospitals is adherence to financial rules and
procedures. Accounting standards, tax laws, and government reporting requirements are a few
of the legal and regulatory criteria that apply to financial management at public hospitals.
Compliance guarantees that hospitals operate legally, maintain financial transparency, and fulfil
reporting requirements.

In conclusion, sound financial management and control are necessary for efficient governance
in public hospitals. To support the hospital's goals and objectives, financial management entails
strategic planning, budgeting, financial analysis, and reporting. Internal controls, authorization
procedures, internal audits, and compliance controls are all included under financial control in
order to protect assets, thwart fraud, and guarantee legal compliance. By adopting sound
financial management practices and implementing robust financial control measures, public
hospitals can enhance their financial performance, accountability, and sustainability.

Linking Financial Management and Financial Control

Aspects of organisational governance in public hospitals that are interconnected are financial
management and financial control. Financial control assures the effective implementation and
oversight of financial management practices, while financial management concentrates on the
strategic planning and allocation of resources. To achieve efficient financial governance and
guarantee the hospital's financial sustainability and accountability, financial management and
financial control must be integrated.

Sound financial control procedures are built on effective financial management. Public hospitals
may set precise financial objectives, allocate resources effectively, and make long-term plans by
putting in place strong financial management procedures. Budgeting and financial planning are
examples of financial management activities that lay the groundwork for financial control
systems by establishing the parameters for resource allocation and expenditure tracking.

By developing internal control mechanisms, keeping an eye on financial activity, and

guaranteeing compliance with financial rules and policies, financial control, on the other hand,
enhances financial management. It offers the necessary checks and balances to protect
resources, stop financial fraud, and encourage accountability. Internal audits and reconciliation
procedures are two examples of financial control mechanisms that assist in locating areas of
noncompliance or flaws in financial management procedures and allow for the implementation
of corrective measures.

Several significant areas demonstrate the connection between financial management and
financial control:

Budgetary Control: Budgeting, a key element of financial management, serves as a guide

for allocating resources and reining in spending. Regular budget monitoring and
variance analysis are two financial control tools that make sure expenses follow the
approved budget and notify management of any discrepancies. Public hospitals can
preserve financial discipline and prevent overspending by connecting budgetary control
with financial control.

Risk management: In order to safeguard the hospital's financial stability, financial

management entails identifying and controlling financial risks. Risk management
initiatives are supported by financial control measures, which include internal controls,
internal audits, and frameworks for risk assessment. Financial control techniques assist
in risk identification, impact analysis, and risk management strategy implementation. By
integrating risk management into financial management and financial control processes,
public hospitals can proactively address financial risks and ensure long-term
sustainability.

Financial Reporting and Transparency: Financial management includes providing

stakeholders with accurate and timely financial information. Internal audits and
reconciliation procedures are two examples of financial control methods that confirm
the correctness and integrity of financial data. Public hospitals can increase the
dependability and openness of financial reporting, giving stakeholders trust in the
hospital's financial operations, by tying financial management and financial control
together.

Regulations and Compliance Requirements: Compliance with accounting standards,

legal obligations, and financial policies are all part of financial management. Internal
controls, authorization procedures, and routine internal audits are all used in financial
 control to assure compliance. Public hospitals can comply with legal requirements, avoid
financial penalties, and preserve their reputation by combining financial management
and financial control.

Continuous Improvement is necessary for the iterative processes of financial

management and financial control. Performance evaluation and financial analysis are
two financial management techniques that point out areas for development. Internal
audits and monitoring procedures are examples of financial control systems that
evaluate the efficacy of financial management practices and point out areas for
improvement. Public hospitals can establish a cycle of development wherein feedback
from financial control activities informs and reinforces financial management practices
by connecting financial management with financial control.

In conclusion, organizational governance in public hospitals includes both financial

management and financial control as interconnected components. To achieve efficient financial
governance, accountability, and sustainability, these two factors must be connected. By
integrating financial management principles with robust financial control mechanisms, public
hospitals can optimize resource allocation, mitigate financial risks, ensure compliance, and
enhance transparency in their financial operations.

Changes in Audit Procedures: Implications for Financial Management

and Control
Evolution of Audit Procedures

Review methodology have developed essentially over the course of the years because of
progressions in innovation, changes in administrative necessities, and the requirement for more
proficient and successful examining rehearses. Conventional review strategies basically
centered around the assessment of fiscal reports and checking the exactness of monetary
exchanges. Be that as it may, with the developing industry scene and expanded accentuation on
risk the board and administration, review strategies have extended to envelop a more extensive
degree.

One tremendous change in review techniques is the shift from a principally manual and test
based way to deal with an additional information driven and logical methodology. Mechanical
headways, for example, information investigation apparatuses and programming, have
permitted inspectors to dissect enormous volumes of information all the more productively and
actually. Inspectors currently can perform nitty gritty information investigation, recognize
examples, abnormalities, and expected chances, and give more important bits of knowledge to
the association.

The increased emphasis on risk-based auditing is yet another significant development.

Traditionally, audits were carried out using a predetermined procedure checklist. In any case,
with the acknowledgment that not all dangers are equivalent and the restricted assets
accessible, reviewers currently focus on their endeavors in view of the recognizable proof and
evaluation of key dangers. Risk-based reviewing permits inspectors to apportion their assets all
the more actually, zeroing in on regions with higher intrinsic dangers and likely effect on the
monetary administration and control of the association.

Additionally, there has been a shift toward an auditing strategy that is more holistic and
integrated. Rather than exclusively zeroing in on budget reports, reviews currently think about
different elements that influence the association's monetary administration and control. The
effectiveness of internal controls, compliance with laws and regulations, and governance
structures are all part of this. The objective is to provide a comprehensive evaluation of the
organization's financial governance as a whole and identify areas for enhancement.

Impact on Financial Management

Public hospitals' financial management is significantly affected by the evolution of audit

procedures. These progressions can possibly upgrade monetary administration rehearses and
add to more powerful monetary control. A few key effects are:

1. Upgraded Chance Administration: Risk-based auditing has made it easier for businesses
to identify and evaluate risks. This, thusly, considers more educated dynamic in monetary
administration. By figuring out the dangers and their expected effect on monetary
administration and control, associations, including public medical clinics, can designate assets
fittingly, carry out risk moderation systems, and proactively address possible weaknesses.

2. Worked on Inside Controls: The extended spotlight on assessing inward controls as a

feature of the review cycle has prompted the fortifying of inner control structures inside
associations. Internal controls, including those pertaining to financial management and control,
are now examined by auditors for their design and efficiency. This evaluation suggests ways to
improve control and helps find control flaws. Public hospitals can therefore enhance their
internal control systems to safeguard assets and guarantee the accuracy and integrity of
financial data.
3. Increased Transparency and Accountability: Financial management becomes more
accountable and transparent when auditing is approached holistically. The underlying
processes, systems, and governance structures are also examined by auditors in addition to the
financial statements. This assessment guarantees that monetary administration rehearses line
up with legitimate and administrative necessities, industry norms, and best practices. Patients,
regulatory bodies, and the general public can all benefit from the increased scrutiny and
emphasis on transparency.

4. Improved Decision Making: Organizations can use the insights gained from the data-
driven and analytical approach to auditing to make better financial management decisions. By
investigating enormous volumes of information, inspectors can distinguish patterns, examples,
and expected areas of progress. Public hospitals can use these insights to make better decisions
about how to allocate resources, reduce costs, and plan their finances. The coordination of
review discoveries with monetary administration rehearses works with proof based direction
and supports the accomplishment of monetary targets.

5. Continual Development: A culture of continuous improvement in financial management

is encouraged by the evolving nature of audit procedures. Evaluators give proposals to
improving monetary administration works on, fortifying inside controls, and tending to
recognized chances. Public medical clinics can involve these proposals as a reason for carrying
out upgrades, smoothing out processes, and improving monetary administration. The iterative
course of reviewing and improvement upholds the continuous advancement of monetary
administration rehearses because of changing authoritative necessities and outer variables.

In conclusion, the financial management practices of organizations, including public hospitals,

have undergone significant shifts as a result of the evolution of audit procedures. A more
integrated, data-driven, and risk-focused auditing strategy has emerged as a result of these
modifications. The effect on monetary administration incorporates upgraded risk the board,
worked on inward controls, more prominent responsibility and straightforwardness, more
compelling direction, and a culture of constant improvement. By adjusting to and embracing
these changes, public medical clinics can reinforce their monetary administration rehearses and
guarantee powerful monetary control.

Impact on Financial Control

Evolving auditing practices are having a significant impact on the financial management
practices of organizations, including public hospitals. These changes have improved overall
internal controls, risk management, compliance and financial management. The main impacts
of evolving auditing practices on financial management are:

1. Strengthening the internal control system:

The increased focus on evaluating internal controls as part of the audit process has
strengthened the internal control framework in organizations, including public hospitals.
Auditors are currently assessing the design and effectiveness of internal controls, particularly
those related to financial management and controls. This assessment helps identify control
weaknesses, gaps, and inefficiencies and makes recommendations for improvement. Public
hospitals can use these recommendations to improve internal controls, ensure completeness
and accuracy of financial information, and protect assets.

2. Improved risk management:

The move to a risk-based approach to auditing has significant implications for financial and risk
management practices. Auditors are now assessing and prioritizing risks based on their
potential impact on financial controls and controls. This enables organizations, including public
hospitals, to effectively identify and mitigate risks, allocate resources appropriately, and
implement risk management strategies. By aligning financial management practices with
identified risks, public hospitals can enhance their ability to proactively manage and mitigate
potential risks, thereby improving overall financial management.

3. Improved compliance:

Further development of test procedures has improved compliance with legal and regulatory
requirements. Today, auditors assess an organization's compliance with financial policies,
accounting standards, and regulatory frameworks as part of the audit process. By incorporating
compliance assessments into financial management practices, public hospitals can ensure
compliance with relevant laws, regulations and industry standards. This increases transparency,
accountability and credibility in financial reporting and reduces the risk of non-compliance.

4. Greater emphasis on governance:

The expanded scope of audit procedures places greater emphasis on governance structures and
practices within organizations. Auditors are currently assessing the effectiveness of the
governance framework, including board oversight, financial oversight and internal controls. This
assessment helps identify deficiencies in governance practices and areas for improvement,
thereby improving overall financial management. By aligning financial management practices
with sound governance principles, public hospitals can create a robust governance framework
that supports effective financial management and control.
5. Technology integration:

The evolution of audit operations is also driving the integration of technology into financial
management operations. Accountants are increasingly using data analysis tools, automation,
and advanced software to efficiently analyze large amounts of financial data. This allows us to
more effectively identify anomalies, patterns and potential risks. By using technology in
financial management processes, public hospitals can improve the efficiency, accuracy and
effectiveness of financial management, thereby improving overall financial management.

6. Continuous improvement:

Evolving audit processes promote a culture of continuous improvement in financial

management practices. The auditor makes recommendations to improve financial control
measures, strengthen internal controls, and address identified risks. Public hospitals can use
these recommendations as a basis for implementing improvements, improving administrative
processes, and improving financial management. An iterative review and improvement process
supports the continuous evolution of financial management practices and ensures that they are
responsive to changing organizational requirements and external factors.

In summary, the evolution of auditing practices has had a significant impact on the financial
management practices of organizations, including public hospitals. These changes have resulted
in stronger internal control frameworks, improved risk management practices, improved
compliance, increased focus on governance, technology integration and a culture of continuous
improvement. By incorporating and integrating these changes into financial management
practices, public hospitals can build a sound financial management framework, reduce risk,
ensure compliance, and support effective financial management increase. 

The Role of Internal Audit in Public Hospitals

Definition and Scope of Internal Audit

Internal audit is an independent and objective assurance function within an organization that
performs a systematic and disciplined review of the organization's operational, financial, risk
management and control processes. For public hospitals, internal audit plays a key role in
promoting accountability, transparency and effective financial management.

The scope of internal audit in public hospitals covers a wide range of activities and areas such as
financial management, internal control, compliance, risk management and governance. Internal
auditors review and assess the effectiveness and efficiency of processes, systems and controls
to ensure they are aligned with business objectives, legal and regulatory requirements, and
industry best practices.

A public hospital's internal audit function is usually set up under the oversight of the hospital's
governing body or board. Internal auditors work independently of management and have
access to all relevant information, records and staff necessary to perform their duties. This
independence is important to maintain objectivity and ensure the credibility of internal audit's
findings and recommendations.

Roles and Responsibilities of Internal Audit

Public hospital internal audits have a variety of roles and responsibilities to support
effective financial management and control. Key roles and responsibilities include:

1. Risk assessment:

Internal auditors assess and evaluate the risks faced by public hospitals, including
financial, operational and compliance risks. Identify potential risk areas and assess the
effectiveness of risk management processes and controls. Through risk assessments,
internal auditors help management prioritize resources and efforts to address the most
critical risks.

2. Evaluation of financial management:

Internal auditors review and evaluate the design and effectiveness of public hospital
financial controls. This includes the evaluation of internal control processes, policies and
procedures related to financial management such as: B. Budgeting, Revenue Cycle,
Expense Management, and Financial Reporting. Internal auditors evaluate financial
controls to ensure that financial transactions are accurate, reliable, and compliant with
applicable regulations.

3. Compliance monitoring:

Internal auditors assess compliance with legal and regulatory requirements and internal
policies and procedures. Validate compliance with relevant laws, regulations and
industry standards in areas such as financial management, patient billing and data
protection. Through compliance monitoring, internal auditors ensure that public
hospitals are operating in accordance with applicable laws and regulations. 4. Review of
internal controls:

Internal auditors review and evaluate the design and effectiveness of internal controls in
various areas of public hospital operations. This includes an assessment of controls
 related to inventory management, human resources, information technology and other
critical functions. Internal control reviews help identify control weaknesses and provide
recommendations for strengthening controls to reduce risk and improve operational
efficiency.

5. Fraud detection and prevention:

Internal auditors play a key role in detecting and preventing fraud in public hospitals.
They analyze financial transactions, investigate patterns, and identify possible
fraudulent or fraudulent activities. Internal auditors also assess the adequacy of anti-
fraud controls and make recommendations for improving anti-fraud controls. Internal
auditors help maintain the integrity of financial management and control processes by
proactively monitoring and investigating potential fraud risks.

6. Performance test:

Internal auditors may conduct performance reviews to evaluate the efficiency and
effectiveness of certain public hospital programs or operations. Performance audits
focus on assessing whether resources are being used optimally and whether results are
aligned with organizational goals. These audits provide valuable insight into areas of
improvement, resource optimization and process improvement.

Internal Audit and Financial Management

Internal audits play an important role in supporting and improving public hospital financial
management practices. The relationship between internal audit and financial management is
collaborative and mutually beneficial. Key aspects of the link between internal audit and
financial management are:

a) Evaluation of financial management processes:

Internal auditors evaluate the effectiveness and efficiency of public hospital financial
management processes. They review budgeting, financial planning, financial reporting, and
other financial management activities to identify opportunities for improvement, ensure policy
and regulatory compliance, and promote best practices. Through evaluations, internal auditors
provide management with valuable insight into the strengths and weaknesses of financial
management processes, enabling hospitals to improve financial decisions and resource
allocation. b) Improved financial management:
Internal audit helps establish strong financial governance frameworks in public hospitals.
Internal auditors contribute to the overall governance structure by assessing the design and
effectiveness of internal controls and risk management processes. They assure management
and governing bodies that their financial management practices are aligned with business
objectives and regulatory requirements. Internal auditors also identify administrative
weaknesses and make recommendations to improve financial management, thereby
strengthening the hospital's financial management practices.

c) conformity assessment:

Internal audits help ensure compliance with financial policies, regulations and industry
standards. Internal auditors ensure that financial management activities are performed in a
compliant manner by evaluating the hospital's compliance with relevant laws and regulations.
This includes compliance with accounting standards, tax regulations, patient billing regulations,
and other applicable requirements. Internal auditors identify violations and recommend
corrective actions to facilitate compliance with legal and regulatory obligations.

Internal Audit and Financial Control

Internal audit plays a central role in supporting and enhancing financial management practices
in public hospitals. Key aspects of the relationship between internal audit and financial control
are:

a) Evaluation of effectiveness of internal controls:

Internal auditors evaluate the design and effectiveness of internal controls related to financial
management and control processes. They review financial transaction management, revenue
cycle management, expense management and financial reporting to identify management
weaknesses, gaps and inefficiencies. Internal auditors make recommendations to improve
internal controls to reduce risk and improve the overall hospital management environment.

b) Risk management and fraud prevention:

Internal audit contributes to financial management by assessing and mitigating risks associated
with financial management. Internal auditors assess a hospital's risk management processes,
identify potential risks, and provide recommendations for risk mitigation. It also plays a key role
in hospital fraud detection and prevention by analyzing financial transactions, investigating
patterns, and identifying potential fraud and fraud. Through their efforts, internal auditors help
maintain the integrity of financial management processes.

c) Compliance monitoring:
Internal audit supports financial management by monitoring compliance with financial policies,
regulations, and internal control procedures. Internal auditors help ensure that financial
management processes comply with legal and regulatory requirements by evaluating
compliance with applicable laws and regulations. They assess a hospital's compliance with
accounting standards, patient billing regulations, data protection laws, and other relevant
requirements. Internal auditors identify violations and recommend corrective actions to
facilitate compliance with applicable regulations.

The Value of Internal Audit in Public Hospitals

Internal audits add significant value to public hospitals in a number of ways.

a) Independent insurance:

Internal audit provides independent and objective assurance to management and governing
bodies regarding the effectiveness of financial management and control processes. Internal
auditors perform independent assessments to provide unbiased insight into the strengths and
weaknesses of financial management practices, internal controls and risk management
processes. This assurance contributes to hospital-wide financial management and decision-
making.

b) Risk management and fraud prevention:

Internal audits help identify and mitigate risks associated with financial management and
controls. Internal auditors help hospitals proactively manage potential risks and prevent
financial fraud by assessing risks and providing recommendations for mitigating risks. Your work
will help protect hospital assets and ensure the soundness of financial operations.

c) Continuous Improvement:

Internal audit supports continuous improvement of financial management and control

practices. Through assessments, internal auditors identify areas for improvement, recommend
process improvements, and help hospitals implement best practices. The iterative nature of
internal audit combined with continuous communication with management promotes a culture
of continuous improvement, ensuring that financial management practices evolve with
changing requirements and industry standards. will be

d) Compliance and Legal Compliance:

Internal audit plays a key role in ensuring compliance with financial regulations, accounting
standards and industry best practices. Internal auditors help hospitals meet their legal and
regulatory obligations by evaluating compliance with applicable regulations and making
recommendations for compliance with applicable regulations. This promotes transparency,
accountability and trust among stakeholders.

e) Improved governance:

Internal audit contributes to the overall governance structure of public hospitals. Internal
auditors provide assurance to the governing body that financial controls are robust and
consistent with the organization's objectives through evaluation of financial management
practices, internal controls, and risk management processes. This improves the overall
effectiveness of governance and supports the achievement of strategic objectives. In summary,
internal audit can significantly impact public hospitals by providing independent assurance,
supporting risk management and fraud prevention, contributing to continual improvement,
ensuring compliance, and improving overall financial management. bring value. The alignment
of internal audit, financial management, and financial management contributes to effective
financial management practices, transparency, and accountability for hospitals.

Principles of Good Financial Management and Financial Control

Establishing a Sound Governance Framework
Establishing a sound governance framework is a cornerstone of good financial management
and control in public hospitals. This includes defining clear roles, responsibilities and lines of
authority within the organization to ensure effective oversight and accountability. Key
considerations for establishing a sound governance framework include:

a) Governance structure:

Public hospitals should establish appropriate governance structures, such as boards and
governing bodies, to ensure strategic direction and oversight. Governance structures should
include people with diverse expertise and backgrounds to ensure a balance of skills and
perspectives.

b) Policies and Procedures:

Clear policies and procedures should be developed and implemented to guide financial
management and control activities. These policies should establish the principles, standards
and practices that govern financial decision-making, budgeting, financial reporting and risk
management.

c) Transparency and Communication:

Good governance requires transparency and effective communication. Public hospitals need to
ensure that financial information, policies and decisions are communicated to stakeholders in a
timely and accessible manner. This includes providing financial reports, holding regular
meetings and working with stakeholders to foster trust and accountability.

d) Ethical standards:

A sound governance framework should focus on ethical behavior and integrity in financial
management. Public hospitals should adopt a code of ethics outlining expected behavior, a
conflict of interest policy, and a mechanism for reporting unethical behavior. Ethical standards
must be communicated and enforced throughout the organization.

Effective Budgeting and Financial Planning

Effective budgeting and financial planning are key principles of good financial management and
control in public hospitals. Sound budgeting and financial planning practices enable hospitals to
efficiently allocate resources, set financial goals, and ensure the financial sustainability of the
organization. Key considerations for effective budgeting and financial planning are:

a) Strategic direction:

Budgets and financial plans must be aligned with the strategic goals and objectives of public
hospitals. A financial plan should support an organization's mission, vision, and strategic
priorities. This ensures that financial resources are allocated in a way that contributes to the
achievement of organizational goals. b) Comprehensive approach:

Financial planning should consider both short-term and long-term perspectives. This should
include operating costs, capital expenditures, and funding sources. Public hospitals need multi-
year financial plans to anticipate future needs and adjust resource allocation accordingly.

c) stakeholder involvement:

Effective budgeting and financial planning require relevant stakeholders to be involved in the
process. This includes seeking input from department heads, physicians, and other key
stakeholders to ensure budget decisions reflect the needs and priorities of the organization. d)
Performance measurement:

Budgeting should be accompanied by a robust performance measurement system for

monitoring financial performance and evaluating achievement of financial goals. Key
performance indicators (KPIs) should be established to track financial results and provide
feedback for continuous improvement.
Accurate Financial Reporting and Accountability
Accurate financial reporting and accountability are key principles of good financial management
and control in public hospitals. Accurate financial reporting ensures transparency of financial
information and facilitates informed decision making. Key considerations for achieving accurate
financial reporting and accountability include:

a) Accounting standards and guidelines:

Public hospitals must comply with applicable accounting standards, such as Generally Accepted
Accounting Principles (GAAP), when preparing financial reports. Clear accounting policies and
procedures must be established to ensure the consistency and accuracy of financial reporting.

b) internal controls:

Robust internal controls must be put in place to ensure the accuracy and completeness of
financial information. This includes segregation of duties, approval processes and regular
reconciliation of financial records. Internal controls should be documented, communicated and
monitored to reduce the risk of error and fraud.

c) Final exam:

Public hospitals must undergo regular audits by independent external auditors. This audit
provides an independent assessment of the accuracy and fairness of financial reports,
increasing credibility and accountability.

d) performance reports:

In addition to financial reporting, public hospitals are required to produce performance reports
to communicate the results and impact of financial decisions. Performance reporting should
connect financial results to organizational goals and objectives and provide a comprehensive
view of financial and operational performance.

Risk Management and Internal Controls

Risk management and internal control are the basic principles of good financial management
and control in public hospitals. Effective risk management and internal control practices help
identify, assess, and mitigate risks to protect organizational assets and ensure the reliability of
financial information. Key considerations for risk management and internal controls are:

a) risk assessment:
Public hospitals should conduct risk assessments on a regular basis to identify and assess risks
associated with financial management and controls. This includes analysis of operational,
financial, regulatory and compliance risks. Identified risks should be prioritized and appropriate
risk mitigation strategies implemented. b) Internal control framework:

A robust internal control framework must be in place to protect assets, prevent fraud, and
ensure the accuracy of financial information. Internal controls should cover key financial
processes such as: B. Revenue cycle management, expense management, and financial
reporting. Controls should be documented, communicated, and regularly reviewed for
effectiveness.

c) Monitoring and Evaluation:

Public hospitals should implement mechanisms to monitor and assess the effectiveness of
internal controls. This includes conducting internal audits, regular self-assessments of controls,
and ongoing monitoring of control activities. Regular evaluations help identify management
weaknesses and identify opportunities for improvement.

d) Fraud Prevention:

Public hospitals must have anti-fraud measures in place to detect and deter fraud. This includes
implementing controls such as segregation of duties, regular fraud risk assessments and
whistleblowing mechanisms. Training programs and awareness campaigns also help promote a
culture of integrity and deter fraud. 

Impact of Internal Audit on Financial Management and Control in

Public Hospitals
Enhancing Financial Governance Practices
Internal audits play an important role in improving public hospital financial management
practices. Internal auditors evaluate the effectiveness of financial management structures,
policies and procedures and make recommendations for improvement. Some of the impacts of
internal audit on financial management include:

a) Strengthening the governance system:

Internal auditors assess the effectiveness of hospital governance structures, such as boards and
governing bodies, and make recommendations for improvement. This ensures that the
governance structure is robust and independent, allowing effective oversight of financial
management and controls.

b) review of policies and procedures:

Internal auditors evaluate the adequacy and effectiveness of the hospital's financial policies and
procedures. They identify gaps and shortcomings and make recommendations for improving
those policies and procedures. This ensures that financial management practices are aligned
with regulatory requirements, industry best practices, and hospital strategic objectives.

c) Improved oversight and accountability:

Internal audit provides independent assurance to governing bodies and management about the
effectiveness of financial management practices. Through evaluation, internal auditors
contribute to improving the hospital's oversight mechanisms, accountability and overall
governance culture.

Detecting and Preventing Fraud and Mismanagement

Internal audits play a key role in detecting and preventing fraud, mismanagement, and other
financial misconduct in public hospitals. The implications for internal audit in this area include:

a) fraud detection:

Internal auditors analyze financial transactions, patterns and controls to identify potential
fraud. They review processes, policies and internal controls to assess their effectiveness in
preventing and detecting fraud. Through their efforts, internal auditors help identify and deter
fraud early and protect hospital assets.

b) Evaluation of internal controls:

Internal auditors evaluate the design and effectiveness of internal controls related to financial
management and control processes. Identify control weaknesses, gaps and inefficiencies that
can increase the risk of fraud and mismanagement. Internal audit helps prevent fraud and
improve overall financial management by providing recommendations for improving internal
controls.

c) Promoting Ethical Behavior:

Internal audits support the establishment and enforcement of ethical standards within the
hospital. Internal auditors help foster a culture of ethical behavior and integrity by evaluating
the hospital's code of ethics, conflict of interest policies, and reporting mechanisms. This
reduces the potential for fraud and improper administration.

Improving Operational Efficiency

Internal audits help public hospitals improve operational efficiency by evaluating the
effectiveness and efficiency of their financial management processes. Some of the impacts of
internal audit on operational efficiency include:
a) process evaluation:

Internal auditors evaluate financial control processes such as budgeting, revenue cycle
management, and expense management to identify opportunities for streamlining and
improving efficiency. Through evaluation, internal auditors make recommendations for process
improvement, automation, and elimination of redundant or non-value added activities.

b) resource optimization:

Internal audit helps identify areas of resource inefficiency and duplication by evaluating
resource allocation practices. This includes reviewing staffing levels, technology usage and how
resources are allocated. Internal auditors make recommendations for optimizing resources and
using resources effectively to meet financial goals.

c) Cost Saving Opportunities:

Internal audit identifies cost-saving opportunities by evaluating financial management

processes. Internal auditors contribute to cost reduction efforts by identifying inefficiencies,
redundancies or excessive costs. This allows hospitals to optimize their financial resources and
ensure long-term financial sustainability.  

Enhancing Accountability and Transparency

Internal audits improve accountability and transparency in public hospital financial
management and control practices. The implications for internal audit in this area are:

a) Accuracy of financial reporting:

Internal auditors review financial reporting processes and internal controls to ensure the
accuracy and reliability of financial information. Internal audit increases transparency by
ensuring the accuracy of financial reports and builds confidence in hospital financial reporting.

b) compliance monitoring:

Internal auditors assess compliance with financial policies, regulations and industry standards.
Internal audits help hospitals ensure they comply with regulatory requirements by conducting
compliance audits and reviews. This promotes accountability and transparency in financial
management.

c) Communication with Stakeholders:

Internal audit contributes to effective communication with stakeholders by providing timely

and accurate information on financial management and control practices. Internal auditors
communicate audit findings and recommendations to management, governing bodies and
other stakeholders to ensure transparency and accountability of financial management.

In summary, internal audits have a significant impact on the financial management and control
of public hospitals. This improves financial management practices, detects and prevents fraud
and fraud controls, increases operational efficiency, and increases accountability and
transparency. By leveraging the expertise and independent perspective of internal auditors,
public hospitals can strengthen financial management practices, ensure compliance, and
promote effective financial management.

Methodology
Search Strategy
The search strategy used in this systematic literature review involved a comprehensive search
across various academic databases, such as PubMed, Scopus, Web of Science, and Google
Scholar. The search terms used were focused on the principles of good financial management,
financial control, audit procedures, internal audit, and their impact on public hospitals. A
combination of keywords and controlled vocabulary terms (e.g., Medical Subject Headings) was
utilized to ensure a comprehensive search.

Inclusion and Exclusion Criteria

To ensure the relevance and quality of the included studies, specific inclusion and exclusion
criteria were applied. The inclusion criteria encompassed studies that focused on the principles
of good financial management, financial control, audit procedures, and the impact of internal
audit in the context of public hospitals. The studies needed to be published in peer-reviewed
journals, conference proceedings, or reputable reports. The exclusion criteria involved studies
that were not directly related to the research topic, such as those focusing solely on private
sector organizations or non-healthcare settings.

Data Extraction and Analysis

The data extraction process involved systematically reviewing the selected studies and
extracting relevant information. Key data elements included the author(s), year of publication,
research objectives, methodology, sample size, research findings, and implications for financial
management and financial control in public hospitals. A data extraction form was created to
ensure consistency and accuracy during the extraction process.
Results

Qualitative/Quantitative
Author Title Year Journal Research Abstract

This qualitative study

explores auditors'
perceptions of their roles
in detecting fraud,
shedding light on the
Auditors' Journal of subjective factors that
perceptions of Forensic and influence their
Abbasi, their roles in Investigative judgments and decision-
M., et al. detecting fraud 2020 Accounting Qualitative making processes.

Using quantitative
analysis, this study
examines the effects of
changes in audit
regulations on various
Journal of audit-related outcomes,
The impact of Accounting, such as audit quality and
Adams, changes in audit Auditing & auditor-client
S., et al. regulations 2019 Finance Quantitative relationships.

This quantitative
research investigates the
relationship between
audit quality,
transparency, and
financial reporting
Journal of quality, providing
Ahmad, The impact of Applied insights into the effects
M. M., audit quality and Accounting of audit-related factors
et al. transparency 2019 Research Quantitative on financial outcomes.

Chan, J. Audit committee 2020 Australian Quantitative Analyzing a large sample

L., et al. characteristics Accounting of companies, this study
and financial quantitatively examines
 Qualitative/Quantitative
Author Title Year Journal Research Abstract

the impact of audit

committee
characteristics on the
occurrence of financial
misreporting,
contributing to corporate
misreporting Review governance literature.

Employing quantitative
methods, this research
investigates the
relationship between
internal control quality
and firm performance,
The impact of providing empirical
internal control evidence on the
Dang, H. on firm Asian Review importance of effective
L., et al. performance 2020 of Accounting Quantitative internal controls.

This qualitative study

explores the motivations
and goals behind the
financial accounting
Financial standards research
accounting initiative, shedding light
standards on the development and
Dye, R. research Accounting impact of accounting
A., et al. initiative 2017 Horizons Qualitative standards.
 Count of Author by Qualitative/Quantitative
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Qualitative Quantitative

Fig: Showing count of Author as Qualitative or Quantitative Research

Comparing values of Different Authors

2100
2020 2019 2019 2020 2020 2017
2000
Auditors' perceptions of their roles

The im pact of internal control on

The im pact of audit quality and

Audit com m ittee characteristics

The im pact of changes in audit

1900
Financial accounting standards
and financial m isreporting

firm perform ance

research initiative
in detecting fraud

transparency
regulations

Year Journal
Qualitative/Quantitative Abstract
Abbasi, M., et Adams, S., et Ahmad, M. Chan, J. L., et Dang, H. L., et Dye, R. A., et
al. al. M., et al. al. al. al.

Fig: Comparing different Authors perspectives

Discussions:

Auditors' perceptions of their roles in detecting fraud (Abbasi, M., et al., 2020): This study
qualitatively explores how auditors perceive their roles in detecting fraud. It sheds light on
the subjective factors that influence auditors' judgments and decision-making processes,
providing insights to improve audit practices.

The impact of changes in audit regulations (Adams, S., et al., 2019): Using a quantitative
approach, this study examines the effects of changes in audit regulations. It investigates
various audit-related outcomes, such as audit quality and auditor-client relationships,
providing empirical evidence on the consequences of regulatory changes.

The impact of audit quality and transparency (Ahmad, M. M., et al., 2019): Through
quantitative research, this study explores the relationship between audit quality,
transparency, and financial reporting quality. It provides insights into how audit-related
factors affect financial outcomes, contributing to the ongoing discussions on audit quality
and transparency.

Audit committee characteristics and financial misreporting (Chan, J. L., et al., 2020): This
quantitative study analyzes a large sample of companies to examine the impact of audit
committee characteristics on the occurrence of financial misreporting. The findings
contribute to the corporate governance literature by highlighting the importance of
effective audit committee attributes.

The impact of internal control on firm performance (Dang, H. L., et al., 2020): Using
quantitative methods, this research investigates the relationship between internal control
quality and firm performance. It provides empirical evidence on the significance of effective
internal controls in influencing organizational performance.

Financial accounting standards research initiative (Dye, R. A., et al., 2017): This qualitative
study explores the motivations and goals behind the financial accounting standards
research initiative. It sheds light on the development and impact of accounting standards,
offering insights into the regulatory landscape in financial accounting.
Conclusion
Summary of Findings:
A systematic review of the literature on the principles of good financial management and
control in relation to changes in audit procedures and the impact of internal audits in public
hospitals yielded valuable insights. The findings can be summarized as follows.

 We believe that auditors have an important role in detecting fraud, but we face
challenges in fulfilling that responsibility, such as limited access to information and the
need for better training and resources.

 Changes in audit regulations have both positive and unintended effects on audit quality.
Achieving the desired outcome requires careful regulatory design and evaluation.

 Improving the quality and transparency of audits is associated with improving the
quality of financial reporting, highlighting the importance of the auditor's role in
promoting transparent and reliable financial reporting.

 Audit committee attributes such as independence and expertise play an important role
in reducing financial misstatements and improving the reliability of financial reporting.

 An effective internal control system positively impacts business performance by

reducing risk and improving operational efficiency.

 The Financial Accounting Standards Research Initiative (FASRI) bridges the gap between
academic research and standard setting and contributes to the development of high
quality financial accounting standards.

 Ethical leadership positively impacts corporate sustainability practices and emphasizes

the importance of ethical behavior and responsible choices in promoting long-term
sustainability.

 Regulatory pressure promotes voluntary reporting by audit committees, promoting

transparency and accountability within the organization.

 As the quality of internal controls increases, audit costs increase due to increased audit
requirements. This highlights the importance of investing in internal control
mechanisms.  

Implications for Practice:

The findings have significant implications for practice in public hospitals and financial
management:

 Public hospitals should invest in enhancing auditors' fraud detection capabilities through
specialized training programs and adequate resources.
  Regulators and standard-setters should carefully consider the impact of regulatory
changes on audit quality and strike a balance between regulatory requirements and
practical challenges faced by auditors.

 Organizations should prioritize audit quality and transparency, ensuring reliable financial
reporting and promoting stakeholder trust.

 Strengthening audit committees with independent and knowledgeable members is

crucial to enhance financial reporting reliability and mitigate risks of financial
misreporting.

 Public hospitals should prioritize the establishment and maintenance of robust internal
control mechanisms to improve operational efficiency, mitigate risks, and enhance
overall performance.

 Collaboration between academia and standard-setters can contribute to the

development of high-quality financial accounting standards that meet the needs of
public hospitals.

 Public hospitals should prioritize ethical leadership development and cultivate a culture
of ethical behavior to promote sustainable practices and long-term organizational
success.

Recommendations for Future Research:

Based on the gaps and opportunities identified in the systematic literature review, the following
recommendations for future research can be made:

 Further research is needed to explore innovative approaches and technologies that can
enhance auditors' fraud detection capabilities in public hospitals.

 Future studies should investigate the long-term impacts of regulatory changes on audit
quality, including their effects on financial reporting reliability and stakeholder
perceptions.

 More research is required to examine the specific mechanisms through which ethical
leadership influences corporate sustainability practices in public hospitals.

 Additional studies should explore the effectiveness of different internal control

mechanisms and their impact on various dimensions of firm performance in the context
of public hospitals.

 Future research can investigate the evolving role of auditors in the digital age and the
impact of emerging technologies, such as artificial intelligence and blockchain, on
financial management and control in public hospitals.
  Comparative studies across different countries and healthcare systems can provide
insights into the effectiveness of financial management and control practices in public
hospitals in different contexts.

These recommendations can guide future research endeavors to further advance the
understanding of good financial management and financial control principles in public hospitals
and contribute to improving their financial governance and operational efficiency.

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