AIS
Chart of Accounts Problem
HCA is a major healthcare corporation consisting of 130 hospitals divided into 12 regional offices. The three divisions oversee the 12 regions, and then corporate headquarters is a consolidation of all divisions. Revenues for the hospitals range from $45 million to $600 million.
Each hospital is independently managed by a CEO and other administrative support staff (HR, Accounting, etc.). The current financial and managerial reporting systems are inefficient and need to be revised to reduce the time required to upload data from the hospitals, regions and divisions to complete financial statements for external reporting purposes.
A consultant has been hired by the corporation to improve the reporting system. The consultant has determined that a new chart of accounts is necessary. The redesigned integrated reporting system is to include the following features: it should give hospital CEOs, regional managers, division managers and corporate uniform, timely, and accurate reports. Monthly reports should be uniform across hospitals, regions and divisions and be completed by the third business day of the following month. Corporate financial reports should be available at the same time.
Reports should provide a basis for measuring return on investment for each hospital/region/division.
The system should generate meaningful budget data for planning and decision making purposes.
The organizational structure is as follows:
Each division is responsible for a number of regions, ranging from three to six.
The regions provide administrative support to hospitals, such as computer support for patient records, sharing of administrative resources, etc. There are not more than 13 hospitals per region.
Hospitals are considered investment centers.
In addition, accounts are divided into not more than six major categories. For example, assets may be classified as current assets, property, plant and equipment, etc. This is also true for all other types of accounts. There are not more than 20 accounts within the categories, except for expenses which may be as many as 300 expense accounts.
REQUIRED:
Determine the coding scheme for the new chart of accounts. Do NOT create an entire chart of accounts (listing of all account numbers and account name)). Specify the meaning of each digit
in the account number scheme you create. Create only two account numbers:
(1) an account number for X-ray machines in a hospital.
(2) an account number for secretarial salaries at a division.

AIS Chart of Accounts Problem HCA is a major healthcare corporati...