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STUDENT RESEARCH

ACCOUNTANCY DEPARTMENT
College of Business, Economics, Accountancy and Management
THE MEDIATING EFFECT OF FINANCIAL ACCOUNTABILITY TO THE
RELATIONSHIP OF INTERNAL CONTROL AND SERVICE DELIVERY OF
HEALTH SERVICE INSTITUTIONS IN LIPA CITY.

A Proposed Research Paper
Presented to the Faculty of the
College of Business, Economics,Accountancy and Management
De La Salle Lipa

In Partial Fulfillment
of the Requirements for the Degree
BACHELOR OF SCIENCE IN ACCOUNTANCY

COSA, JOHN KENNETH ADAJAR
GOMEZ, MATTHEUS LURENZ ADVIENTO
MISTAS, KIM ANGELO ABIERA
OCTOBER 2015

ABSTRACT
Though the health care sector of the Philippines has improved dramatically during
the recent years, there are still some complaints regarding the quality and availability of
health care services being provided by specialized institutions in the country. There are also
some issues regarding the misuse of the resources of these institutions, which leads to
further dissatisfaction of clients. With this surfacing issues, this study will provide further
insight on how the management of Health Service Institutions (HSIs) in the Philippines
conduct their operations by assessing their internal control, financial accountability and
service delivery. The assessment process will include the response of those in charged with

STUDENT RESEARCH
ACCOUNTANCY DEPARTMENT
College of Business, Economics, Accountancy and Management
governance with 10 HSIs in the vicinity of Lipa City, Batangas. The primary data for this
research will be obtained through the questionnaire adapted from Ntongo (2012). The fivepoint Likert Scale will be used to determine the perceived quality of those in charge of
governance of the institutions that will be involved in the research in terms of their financial
accountability, internal control and service delivery.

TABLE OF CONTENTS
Page
ACCEPTANCE AND APPROVAL SHEET

i

ABSTRACT

ii

LIST OF TABLES

v

LIST OF FIGURES

vi

LIST OF APPENDICES

vii

Chapter
1
BACKGROUND OF THE STUDY
Introduction ………………………………………………

1

Statement of Research Problem…………………………………

3

DE LA SALLE LIPA
1962 J.P. Laurel Highway, Mataas na Lupa, Lipa City, Batangas

2

STUDENT RESEARCH
ACCOUNTANCY DEPARTMENT
College of Business, Economics, Accountancy and Management
Objectives of the Study……………………………….……….............. 3
Research Framework ……………………………………....................

2

1.1 Conceptual Framework

4

1.2 Operational Framework

5

Hypotheses………………………………………….…………………

6

Significance of the Study……………………………..…………

6

Scope and Limitations ………………………………….………

6

Operational Definitions………………………………………

7

REVIEW OF RELATED LITERATURE
Internal Control Framework…….…..
…………………………………….

8

Accountability…….…..……………………………………

14

Philippine Health System …….…..
……………………………………...…

17

2.1 Effect / Relationship / Influence / Association

3

2.2 Internal Control and Financial Accountability………………………

19

2.3 Financial Accountability and Service Delivery..............................

21

2.4 Related Studies …………………………………………………

22

2.5 Literature Synthesis ………………………………………………

23

RESEARCH METHOD
3.1 Research Design …………….……….………………….…………

24

3.2 Respondents ……………………………………………...…..….....

24

3.3 Locale of the Study ………………………………………...…........

25

3.4 Research Tools and Instrument …………………………………. .

25

3.5 Data Gathering Procedures …………………………………..........

26

3.6 Data Analysis and Interpretation ………………………………......

27

DE LA SALLE LIPA
1962 J.P. Laurel Highway, Mataas na Lupa, Lipa City, Batangas

... Laurel Highway.. Accountancy and Management REFERENCES APPENDICES LIST OF TABLES Table Page 1 Interpretation Table......... Lipa City.. Mataas na Lupa................. Economics.... Batangas ..............................STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business.. 28 DE LA SALLE LIPA 1962 J................P...... 27 2 Pearson correlation analysis Interpretation Table.....

Economics. Lipa City. Laurel Highway.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. Accountancy and Management DE LA SALLE LIPA 1962 J. Mataas na Lupa.P. Batangas .

Batangas . Economics.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. Laurel Highway.P. Accountancy and Management LIST OF FIGURES Figures Page 1 Conceptual Framework ……………………………… 4 2 Operational Framework ………………………………… 5 DE LA SALLE LIPA 1962 J. Mataas na Lupa. Lipa City.

Batangas . Economics. Lipa City.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. Mataas na Lupa. Laurel Highway.P. Accountancy and Management LIST OF APPENDICES Appendix A Questionnaire DE LA SALLE LIPA 1962 J.

The primary components of a desirable Internal Control system are control environment. Accountancy and Management CHAPTER I INTRODUCTION Background of the Study Numerous fraudulent activities have surfaced in this current age of the business world. according to PSA 315. This is the reason why in this point of time. especially. In a sense. with reliability in terms of financial reporting. It is because as published in the Philippines Health System Review (2011). Lipa City. total health spending was 3. the essence and presence of internal control measures in businesses has become more necessary. henceforth). Batangas . risk assessment.9% of Gross Domestic Product (GDP) which was relatively low DE LA SALLE LIPA 1962 J. As a developing country. Laurel Highway. Mataas na Lupa.P. effectiveness and efficiency of operations and compliance with necessary laws and regulations. information and communication and monitoring of activities. Economics. the Philippines is not in perfect shape in terms of providing quality health services. following the occurrence of numerous global financial scandals.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. hospitals and local health clinics. they type of internal control that a business uses in their operations is a key indicator regarding the quality of products and services that they offer. the quality of products and services being offered to the public is placed in doubt. Though Internal Control is conveniently aligned with the work of accountants and auditors. Internal Control. it is the individuals that is given the responsibility of managing the business that has significant influence in assessing and implementing such control. specifically. by Health Service Institutions (referred to as HSIs in this paper. And during this age when people are becoming more dependent on the products and services being given by businesses. is the process that those in charge with governance in a business entity designs and implements in carrying out their business operations and achieving the entity’s goals and objectives.

in the Philippine Setting. Lipa City. in order to examine if there truly are Internal Controls in place for operations and whether financial accountability is embedded in the provision of health care services by these institutions. There are reports that some HSIs have an untimely manner of responding to the immediate needs of patients. of services has been the primary concern of this country in its deliverance of better health care for people. (Oberman et. Some complaints also included the selection of people who would treated. with well-stocked supplies and drugs and health care providers who are well-educated and competent. Batangas . Other disturbing news of misappropriation and misusage of medical facilities and resources have surfaced. depending on the capacity to pay for the services that the patient requires.al. in terms of enrolment.P. combined with low quality. there is a continuing discontent among the people regarding the quality of health services provided to them. This program was considered a success. 35% from Visayas and 22% in Mindanao. Provision of health care. Numerous complaints regarding delays. This means that health care services does not receive much attention when it comes to expenditures for the year. Mataas na Lupa. DE LA SALLE LIPA 1962 J.9%.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. However. Accountancy and Management compared to Western Pacific regional average of 6. Laurel Highway. is constantly being monitored and funded by the government. This gives pressure to Health Service Institutions in the Philippines to come up with better strategies in order to assure their clients that they are willingly taking full accountability to maintain fully functional facilities. A proof of this statement is that the Philippine Government has recently instituted the National Health Insurance Program (NHIP) that aims to assist in the health needs of the Philippine Population. These are the reasons why the necessity to check on the Internal Control Measures of HSIs have surfaced. 2006) There is an estimate of 20 million Filipinos registered in this program and that 43% of this number came from NCR and North Luzon. Economics.

STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. Mataas na Lupa. Batangas. Batangas? 4.P. Economics. Batangas? 5. DE LA SALLE LIPA 1962 J. What is the profile of the respondent? 2. Batangas? 3. Accountancy and Management Statement of the Research Problems With the initial findings of the researchers. Does financial accountability provide a mediating effect on the relationship between internal control and service delivery? Statement of the Objectives This study entitled “The Mediating Effect of Financial Accountability in Relationship of Internal Control to Service Delivery of Health Service Institutions of Lipa City”. AWhat is the relationship between internal control and financial accountability of HSIs in Lipa City. Batangas . What is the relationship between internal control and service delivery of HSIs in Lipa City. a number of the questions have been raised which the researchers deem to be important in determining the mediating effect of financial accountability in relationship of internal control to service delivery of health service institutions (HSIs) in Lipa City: 1. What is the relationship between financial accountability and service delivery of HSIs in Lipa City. Laurel Highway. Lipa City. To examine the relationship between internal control and financial accountability of HSIs in Lipa City. intends to achieve the following objectives: 1.

Accountancy and Management 2. There is also an enumeration of the factors that are being considered for Internal Control. namely the Control Environment. it shows that there is a connection between the presence of Internal Controls and Service Delivery. Mataas na Lupa. Basically. Conceptual Framework Figure 1. Economics.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. 4. internal control. To assess whether financial accountability has a mediating effect on the relationship of internal control and service delivery. To examine the relationship between internal control and service delivery of HSIs in Lipa City. Financial Accountability and Service Delivery in Private Health Providers of Kampla District.” This framework is based on the AMF Report on Corporate Governance and Internal Control (2007). Control Activities. which explains the importance of Corporate Governance and its role in creating an effective Internal Control. Lipa City. Information DE LA SALLE LIPA 1962 J. it shows the relationship of the three major concepts of the paper.P. Batangas. In this diagram. 3. Risk Assessment. Laurel Highway.1 Internal Controls. financial accountability and service delivery. Batangas. To examine the relationship between financial accountabiliy and service delivery of HSIs in Lipa City. Financial Accountability and Service Delivery in Private Health Providers of Kampala District (Ntongo. This is the conceptual framework from the dissertation of Ntongo (2012) entitled “Internal Controls. Batangas and . 2012).

P. Laurel Highway. with certain revisions to the framework. the following DE LA SALLE LIPA 1962 J. Timeliness.2 Adapted Framework from the dissertation entitled “Internal Controls. It is an adaptation of the dissertation of Ntongo (2012). such as Quality.2 will be the frame that will be used in the conduct and analysis of this research. Satisfaction and Efficiency). Satisfaction and Efficiency. Mataas na Lupa. Financial Accountability and Service Delivery in Private Health Providers of Kampala District” (Ntongo. and for Service Delivery. Timeliness. Batangas . Economics. Lipa City. the categories in assessing the manner of service deliveries of HSIs will be divided in to two (Service Quality and Service Satisfaction) compared to the original which is four (Quality. Hypothesis To assess the mediating effect of financial accountability in relationship of internal control to service delivery of health service institutions of Lipa City. 2012) The flowchart in figure 1.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. Operational Framework Figure 1. in order to compliment the questionnaire that will be used for this research. Accountancy and Management Communication and Monitoring and Evaluation. The presence of Financial Accountability in the middle of Internal Control and Service Delivery serves a mediating effect between the two. Though it is essentially the same.

Scope and Limitations of the Study  Subject of the Study The study involves the examination of the relationship of internal control and service delivery and the mediating effect of financial accountability between the two. Batangas. Batangas . Providing more literature and research regarding internal control. Laurel Highway.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. Accountancy and Management hypothesis were formulated to serve as guides and foundations for the assessment and investigation.  Respondents of the Study DE LA SALLE LIPA 1962 J. Batangas.P. Providing information to certain government agencies and interested parties on what measures must be taken to improve the quality of health care in Lipa City. Lipa City. HO: Financial Accountability has no effect on the relationship of Internal Control to Service Delivery of Health Service Institutions in Lipa City.  Geographical Scope The study shall be limited to HSIs within the vicinity of Lipa City. Economics. financial accountability and service delivery of HSIs. Mataas na Lupa. Providing a foundation for further improvement of internal control. Significance of the Study The results of the study may lead to: 1. 2. 3. service delivery and financial accountability in the context related to providing health services by health service institutions.

P. but for the purpose of operationalizing the concepts in this study.  Service Delivery – the ability of an entity to provide the services to its customers. Accountancy and Management The study will involve the knowledge and perspective of those in-charge of governance of HSIs in Lipa City. Batangas. the following terms will be interpreted as follows:  Financial Accountability – a concept that deals with the proper utilization. improving business operations and enhancing the credibility of financial reports and information provided by the business. Economics. Batangas . Lipa City. since they are the ones who are more than capable of giving a relevant insight on internal control. with the assignment of people or entities who are willing to be held accountable for any consequence of this process  Health service institutions (HSIs) – may refer to hospitals and medical centers  Internal Control – a process of lessening internal management issues.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. . Operational Definition of Terms Below are the terms and concepts that were profoundly used and considered to complete the study. These terms may have been defined differently in the various related literature. Mataas na Lupa. in which the level of success of the entity depends on the level of satisfaction of the customers. Laurel Highway. DE LA SALLE LIPA 1962 J. supervision and allocation of financial resources of an organization.

management and other personnel. (2) risk assessment. financial accountability. Lipa City. service delivery. Accountancy and Management CHAPTER II REVIEW OF RELATED LITERATURE This chapter will present literature reviews related to internal control. Internal Control Framework According to COSO (2013) the framework for internal control is composed of five interrelated elements. Mataas na Lupa. (3) information and communication. and (5) monitoring and evaluation. These elements are: (1) control environment. health care institutions in the Philippines.P. The second relates to DE LA SALLE LIPA 1962 J. theories. Although the components apply to all entities. Its controls may be less formal and less structured. (3) Compliance with applicable laws and regulations. including performance andprofitability goals and safeguarding of resources. and are integrated with the management process. Laurel Highway. Batangas . Economics. yet a small company canstill have effective internal control. (2) Reliability of financial reporting. These are derived from the way management runs a business.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. The first category addresses an entity's basic business objectives. small and mid-size companies may implement them differently than large ones. designed to provide reasonable assurance regarding theachievement of objectives in the following categories: (1) Effectiveness and efficiency of operations. concepts. Literature and studies presented in this chapter contain information. findings and trends that are contributory and fitting for the operational framework of the study. Internal control is broadly defined as a process. (4) control activities. effected by an entity's board of directors.

Internal control system comprises all comprises of all the policies and procedures applied by the management for the attainment of their objectives through ensuring the reliability of financial information. The term functioning implies that the component or principle continuously exist in the operations and conduct of the control system. Lipa City. According to Ireneo. Reasonable assurance is expected to be the fruit of this function and that it is geared towards the achievement of an entity’s objectives. Control environment DE LA SALLE LIPA 1962 J. Mataas na Lupa.P.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. et al (2012). internal control is a process and a tool of the managementwhich is conducted within or across organizational functions. (Ibid) McNally (2013) stressed about the requirements of effective internal control. including interim and condensed financial statements and selected financial data derived from such statements. Economics. These distinct but overlapping categories address different needs and allow a directed focus to meet the separate needs. management and other personnel of the entity. reported publicly. The third deals with complying with those laws and regulations to which the entity is subject. such as earnings releases. It is effected by those charged with governance. The presence implies a given component or principle exists within the design and implementation of an entity’s system of internal control. Management can conclude they do if all components are present and functioning and the aggregation of internal control deficiencies across the components does not result in one or more major deficiencies. Accountancy and Management the preparation ofreliable published financial statements. all five components of internal control must be present and functioning. Effective internal control also requires that all five components to operate together in an integrated manner. In order for the management to conclude that its system of internal control is effective. Batangas . Laurel Highway.

Control environment is significantly initiated by the board of directors and the audit committee being those charged with corporate governance. participation by those charged with governance. Each corporation should have should have its own corporate culture. According to Evangelista and Racaza (2011). general beliefs. management’s philosophy and operating style. Lipa City. human resources policies and practices. control environment encompasses the following factors: communication and enforcement of integrity and ethical values. the extent to which each is addressed will vary within the entity. Batangas . organizational structure. the management should consider the competence levels for particular jobs and how those levels turn into skills and knowledge.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. Economics. this culture either promotes or hinders ethical behavior. According to PSA 315.P. Competence comprises the knowledge and skill needed to accomplish the assigned tasks. Mataas na Lupa. (2) a management that actively manages and operates the company in a sound and prudent manner. Added to this. rules. Accountancy and Management According to the Revised Code of Corporate Governance of the Philippine Securities and Exchange Commission. practices and attitude of employees. Although all are important. (3) the organizational and procedural controls supported by an effective management information system and risk management reporting systems. and contracts. there are four elements of control environment: (1) the Board which ensures that the company that the company is appropriately and effectively managed and controlled. it is utmost a consideration to create a culture which stresses integrity and ethical values among the members of the organization. commitment to competence. assignment of authority and responsibility. and (4) an independent audit mechanisms to monitor the adequacy and effectiveness and efficiency of operations. safeguarding of assets. regulations. and compliance with law. (Ibid) DE LA SALLE LIPA 1962 J. Furthermore. members of the organization who are professional accountants must comply with the Code of Ethics for Professional Accountants in the Philippines. Laurel Highway.

promotion and compensation to employees. (b) attitudes and actions toward financial reporting. training.P. In line with the operating style and management philosophy. Effectiveness of internal control relies on the honesty and the abilities of the employees. et al. Laurel Highway. The risk assessment process is composed of three steps: risk identification. DE LA SALLE LIPA 1962 J.. Mataas na Lupa. evaluation. and (c) emphasis on meeting budget and operating goals. risks are from both internal and external factors. The more responsible that management philosophy and operating style are executed. Also. establishment of policies relating to the delegation of authority to management and other employees is sufficient proof of a positive control environment. Human resource policies and practices describe the recruitment. Under risk identification. Economics. risks are analyzed and managed. After identification. (Ibid) Internal audit function can strengthen the control environment up to the extent in which the employees adhere to the internal control policies. risk analysis and risk management. (Ibid) Organizational structures influence control environment to the extent at which employees recognize that they will be held accountable. Lipa City. Included are the management’s (a) approach to taking business risks. assignment of authority and responsibility within an organization should be congruent to the former. risk assessment is the identification and analysis of relevant risks to achievement of the objectives. the more likely it is that employees will behave responsibly in working to attain organizational objectives.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. (Ibid) Risk assessment According to Ireneo. forming a basis for identifying how the risks should be managed. Batangas . Accountancy and Management The beginning and ending of an organization’s effective internal control is the management’s philosophy and operating style. information processing and accounting functions of personnel.

A more powerful medium aside from the oral and written information communication is through the manner of dealing with subordinates.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. par.” An entity found to be having a long and rich history of operating with integrity. Batangas . Accountancy and Management Information Systems and Communication According to Evangelista and Racaza. this is a reflection of the cliché. An entity without such a tradition will likely need to put more effort into the way messages are communicated (Ibid). control activities are being referred to as the policies and procedures implemented in the organization to ensure that management’s goals and DE LA SALLE LIPA 1962 J. 14. According to PSA 315 Appendix 2. an internal control system must provide relevant and timely information and communication. to beeffective. “Action speaks louder than words. According to Ireneo. The system should be able to identify the information requirements and create and information system that provides the needed data and reports. et al. Somehow. communication of information is through multiple media such as policy manuals. et al. Mataas na Lupa. will likely find little difficulty in communicating its message. Information can also be transmitted orally through announcements and meetings. communication involves providing an understanding of individual roles and responsibilities pertaining to internal control over financial reporting. bulletin board notices and videotaped messages. Open communication channels help ensure that exceptions are reported and acted on. Control activities According to Ireneo. memoranda. Economics. the extent to which personnel understand how their activities in the financial reporting information system relate to the work of others and the means of reporting exceptions to an appropriate higher level within the entity. Lipa City. Added to this.P. Laurel Highway. and whose culture is well understood by people throughout the organization.

Monitoring ensures that internal control continues to operate effectively. financial reporting and compliance.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business.P. 1996). Batangas . because internal control systems adapt to technology. et al. and policy makers. The progress report provides major information input to the project review (NADC. the essence of monitoring is to determine whether internal control is sufficiently designed. Shenkir & Buton (2003) mentioned that monitoring processes are used to assess the quality ofinternal control performance over time. Not only should the physical progress of the project be monitored. As a result. peer reviews. Control activities are divided into three overlapping categories. and internal audits. Lipa City. innovations and time to suffice the needs of firms. Laurel Highway. Accountancy and Management objectives are met by ensuring that their directives are identifies as necessary to address risks are carried out. There should be one format for monitoring and reporting throughout the life of the project. Monitoring is the evaluation of internal control performances over time. operations. and will be particularly useful when there is a change of personnel. Economics. Changes in external factors which are pertinent to the development of the project should also be registered in the progress report. It also involves the assessment of the design and operation of controls on a timely basis and taking into consideration the necessary corrective actions. Also. and DE LA SALLE LIPA 1962 J. This will aid in providing a solid basis for the analysis of trends and definition of strategies. According to Athony (2004). Monitoring is done to ensure that controls continue to operate effectively. but also the impact of the project. It is accomplished by an on-going monitoring of activities and by separate evaluations of internal control such as self-assessments. Walker. Mataas na Lupa. Monitoring and evaluation According to Ireneo. monitoring of controls is a process to evaluating the quality of internal control performances over time. monitoring also changes based on improvements and changes to address new risks. management. properly executed. Monitoring is a continuous periodic observation of the execution of a task.

accounting. 1999). The gist of accountability is answerability. Internal control is adequately designed and properly executed if all the five control components (control environment. Mataas na Lupa. or justify its actions(Green 2003).risk assessment. Accountability is described to be an organization’s ability to exhibit. Laurel Highway. In his view. Economics. answer. 1999). control activities. Lipa City.Accountability is the ability to supply a justification and accept responsibility for events or transactions and one’s ownactions relative to these events or transactions (KIkonyogo.published financial statements are being prepared reliably.P. accountability is like a Semantic tree: the trunk is governance. Accountability can be analyzed at the individual. Accountability According to Frost (2000) accountability is referred to the liability assumed for ensuring that an obligation to perform a responsibility is achieved. and records management (Munene. auditing. Answerability without sanctions is generally considered to be weak accountability and. applicable laws and regulations are being compiled. . Internal control is effective if management and interested stake holders have reasonable assurance that they understand the extent to which operational objectives are achieved. a main branch is financial accountability which feeds other branches such as budgeting. being liable to answer questions regarding decisions and or actions (Schedler. Another defining element of accountability is the availability and application of sanctions on inappropriate actions and behavior uncovered through answerability. information and communication and monitoring) are evident and functioning asdesigned. and general levels. 2004).STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. Anderson (2009) stressed that one of the elusive concepts in management is accountability. Those responsible should be able to answer the questions and face the consequences of their decisions. organizational. Batangas . Accountancy and Management effective. DE LA SALLE LIPA 1962 J.

Most people tend to liken sanctions to requirements. What has been spent must be ensured with proper documents. Mataas na Lupa. Lipa City.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business.P. Accountancy and Management sanctions without enforcement significantly diminish accountability. Laurel Highway. this suggested need for management to be transparent and conscious when spending the organizational resources while undertaking their activities in a bid to effectively achieve the institutional mission. statutes and regulations. and has gained prominence in organizations for economic corporation and development (OECD. According to Roque (2013) a budget is a set of interlinked plans that quantitatively describe an entity's projected future operations. Economics. enforcement mechanisms are critical from broad legal and regulatory frame works to internal agency monitoring systems Financial accountability According to Bothwell (2001) financial accountability as a performance indicator is connected with ensuring that money given to people is spent according to the budgeted items and activities using the set rules. In essence. Bothwell (2001) and Malinga (2002) noted that financial accountability implies accountability to the public. Furthermore. The function of transparency is important in accountability and it refers to openness. Batangas . Transparence is an essential aspect of ensuring accountability.In another standpoint. 2002). minimizing corruption. ethical standards and good governance. according to Blinkerhoff (2003). Service Delivery DE LA SALLE LIPA 1962 J. Brown (1998) considers financial accountability as the assessment of value for money and acceptance by individuals of personal responsibility for their actions in relation to quality of their outputs and decisions. standards and penalties embedded in laws. Cox (2000).

2000). Quality of service delivery has emerged as the most significant strategy in ensuring the survival of organizations and also a fundamental route to business excellence as well as extending market share of health care organizations according to Lindquist (2007). Accountancy and Management Morgan (2005) have insisted that service delivery has to be communicated over and over again to everyone. but not necessarily. Laurel Highway. Employees at all levels must be parallel with a single vision of what the organization is trying to fulfill.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. Economics. Lipa City. 2000). Service provision that is de-linked from citizen influence and democratic decision making is unlikely to deliver quality services for the poor.P. effective internal communications is the requisite for integration and harmony in the service organizations activities and quality. takes place in interactions between the customer and service employees and/or systems of service providers. service providers and elected representatives is essential to democratic service delivery. delivering high quality service to meet customer’sneeds is essential for success (Porter. According to Samuel (2002). A service delivery gap is that gap between the established delivery standards and the actual service delivered (Crosby. For meaningful contributions. According to Finn & Kayande(2006) a service is an activity or a series of activities of more or less intangible nature that normally. He also added that data collection and evaluation are a means by which organizations can assess their progress on these two forms. Mataas na Lupa. Batangas . Thus. 2002). As competition in the service industry flourishes.This is because satisfaction has a positive relationship to patient’s future decision to return to a facility to receive service. service can beexpressed in terms of capacity to deliver desired services and from which customers get satisfaction. It is an inconsistency between service design/ quality specifications and the actual service quality by the service delivery system. Service delivery can be taken to be an outcome of performance depending on the context in which it is used (Ayen. Rossi (1993) also said that the objective of any social service organization is to improve the results of the target population in some way by providing the right type of services and by providing them in an appropriate and adequate way. Effective engagement between citizens. which are provided as solutions to customer problems. the poor DE LA SALLE LIPA 1962 J.

service delivery and regulation have attempted to tackle these and other inefficiencies and inequalities in the health system. Batangas .P. Inefficiency in service delivery persistsas patient referral system and gatekeeping do not work well. inequities must be considered in health care access and outcomes between socio-economic groups still remain. But implementation has been challenged by the decentralized environment and the presence of a large private sector. A major driver of inequity is the high cost of accessing and using health care. Attracting and retaining staff in under-served areas is key challenge. health sectors from both public and private sectors have been forming partnerships to provide better quality of health care for the Filipinos.d. The Philippines has had a national health insurance agency – PhilHealth – since 1995 and incrementally increased population coverage. and the systems to address when decisions are taken undemocratically or when services are of poor quality. Laurel Highway. providing a more comprehensive benefits package and reducing or eliminating copayments.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. local and national budgets. Successive reform efforts in financing. Lipa City. service options. In July 2010 a major reform effort aimed at achieving ‘universal coverage’ was launched. Accountancy and Management require the ability and capacity to ask questions and. which focused on increasing the number of poor families enrolled inPhilHealth. Economics. Philippine Health System According to Romualdez. but the limited breadth and depth of coverage has resulted in high levels of out-of-pocket payments. ThePhilippines is a major exporter of health workers. yet some rural and poor areas still face critical shortages. sufficient information of their right and entitlements. According to Herrera. In their research. However. often creating fragmentation and variation in the quality of services across the country (Ibid). Mataas na Lupa. the prevalence of communicable diseases has fallen and life expectancy has increased to over 70 years. et al (n. “Overview of Health Sector Reform in the Philippines and DE LA SALLE LIPA 1962 J. et al (2011) the health status of Filipinos has improved dramatically in the Philippines over the last forty years: infant mortality has dropped by two thirds.).

Inc. The Philippine health sector exists in a context of persistent poverty and financial challenges. Nurses have also been trained with excellent standards. having the same health care level with Africa. but contentious coverage issues as well as lack of facilities and trained medical personnel are continuing hindrances for the program. they first acquire experience through practice in the US. malnutrition is one concern on the country’s health care. Cost of medications and hospitalizations are not that expensive in the country. Economics. high quality. Also. According to de Guzman (2015). (n. and cost-efficient healthcare system that canbe accessed by all Filipinos.d. Accountancy and Management Possible Opportunities for Public-Private Partnerships”. Lipa City. Health sector and hospital reform programs instituted bythe government have yielded some positive results. there should be 20 bed in a hospital per 10.P. but the Philippines is still far from achieving its goal of a sustainable.. Also. Laurel Highway. Medical practitioners in the Philippines are graduates from premiere medical universities in the United States. the Autonomous Region in Muslim Mindanao (ARMM) was found to have the worst health system in the country. As of 2009.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. Also. are insufficient based on the national population of 100 million. The Department of Health (DoH) have classified HSIs into four categories from being similar to infirmaries up to those with advanced technology. Batangas .9%. Private and public hospitals in the Philippines differ in facilities and technology. Mataas na Lupa. the Philippines had a national poverty index of 20. The government has established a National Health Insurance Program (NHIP) to provide accessibility to health care to Filipinos. (Ibid) DE LA SALLE LIPA 1962 J. with many of the poorest spending for medical care out-of-pocket. Private hospitals have outnumbered government-owned hospitals in all levels. According to Allianz Health Care. The most noticeable health care issue in the Philippines is illegal drug use. Hospital beds. as per World Health Organization’s (WHO) recommendation. before practicing their profession in the Philippines.000 people.) the healthcare system in the Philippines is considered to be of good standard even if not similar to the impressive technology that other countries have.

Accountancy and Management Internal Control and Financial Accountability The dissertation of William Alonzo Morehead. and segregation of duties (Chambers (1995). Laurel Highway. In the aforementioned study. Widener and Selto (1999) noted that every organization is subject to some kind of risks depending upon several factors. these are: products and services it offers. reviewing of employee performance. 2004). and Ishumgisa (2001)). It will also improve the relationships of the investors and NGOs because it will be more encouraging for the latter to continue supporting the programs of the NGOs. Economics. Morehead (2007) also pointed out that stakeholders have indicated a growing expectation and demand for greater accountability and integrity in financial reporting and compliance with the NGOs’ stated missions. the market in which it is functioning. Cooper &Townley (2000). The activities covered that are covered in the implementation of of a good corporate internal control are overseeing activities in connection with authorizations and reconciliations. and the way it utilizes its resources. Batangas .STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. According to Gendion. Mataas na Lupa.P. the sources through which it is financed. If internal controlsare not well implemented DE LA SALLE LIPA 1962 J. conducting business involves multiple transactions that affect financial performance of the firm. As stated by Kakuru (2001). Lipa City. It thus give importance to the role of having a strong internal control on having financial accountability as its core principles of an organization. accountability for all funds should be maintained at all times (Chen. security of assets. entitled “Internal Control and Governance in Non-Governmental Associations Designed to Provide Accountability and Deter. the presence of a strong internal control measure is way that helps any entity to demonstrate accountability. Added to these. goals and objectives. internal control is a management function that is crucial for proper accountability and. the new developments in the financial sector have paved the way to increase demand for an effective risk management as well as sophisticated corporate governance. Kakuru (1998). Prevent and Detect Fraud and Corruption” is the basis of the relevance of internal control with financial accountability.

the desired employee’s performance and service delivery is achieved in accordance with the set internal control objectives and as per guiding organizational policy. and evaluation of employee performance. Anderson (2000) added that internal control avoids employing idle staff in the organization thus ensuring constant provision of services. assessment of risk involves the analysis and institution of plans in order to prevent the risks associated with the attainment of company objectives. Internal Control and Financial Accountability According to Groth (2005) through the internal controls. availability of employees for work at all times.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. the information and communication component covers the understanding of policies and procedures. DE LA SALLE LIPA 1962 J. timely service delivery. The control activities include policies and procedure formulated by management in order to ensure the effectiveness of carrying out activities with regard to the achievement of organizational goals.P. and equitable allocation of resources and hence. According to Magala (2001) and James (2005. Cox (2000) stated that internal control leads to efficiency in utilization of organization resources whereby. Accountancy and Management in the business. Economics. According to Lame & Tan (2000). monitoring is the most prominent of all steps of ICSs. In their perspective. jobs are carried out as explained by their description. According to ACCA (2004). Laurel Highway. Batangas . Internal control assists managers to acquire the best measures of the impact of different transactions geared towards generating a diversified portfolio of investments. The majority of studies on monitoring and accountability have suggested that fostering it will lead to higher performance. validation of information. it will affect negatively the performance and productivity of the firm and hence impede its capacity. thus enhancing proper accountability. Lipa City.) internal control helps to guarantee that planned activities are achieved as per set objectives in terms of realizing the desired service delivery needed by the organizational policy. Mataas na Lupa.

Reimer & Singh (2004) stressed that the essence of accountability is to make those charged with governance to take responsibility for the actions and resources at their disposal through the establishment of an effective and efficient organization. creating and maintaining wealth primarily lies on accountability built into governance structures of corporations. investment of idle funds. Carmen. Green (2003) refers to accountability as an organization’s capacity to demonstrate. Accountancy and Management Internal controls ensures. the perception DE LA SALLE LIPA 1962 J.P. Monitoring also shows whether the system in place is performing effectively.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. 1993). Batangas . Economics. as this can be seen from service delivery. Financial Accountability and Service Delivery The key to organizational survival. answer or explain its actions. “All health systems contain accountability relations of different types which function with varying degrees of success and often. Brown & Moose (2001) considered accountability desirable because it increases the incentives for actors to perform as expected and that reliability can improve performance and relationship among the parties. Mataas na Lupa. and regular monitoring of utility (ACCA. administrators should put spot clocks and frequent audits so that loss of revenue is minimized. accountability improves service delivery. In his view. Monitoring is important to service delivery because it provides vital feedback on how services are being delivered and whether delivery of those services makes any difference in terms of achieving the organizations specified goals (Rossi. the aim of accountability is to improve performance but not to point fingers or put the blame on someone and deliver punishment and hence. 1993). there is a strong relationship between accountability and service delivery. 2004). For any system to perform effectively there must be a monitoring system (Boidman. According to Frost (2000). usage of funds on planned organizational activities. Lipa City. Laurel Highway. They argued that accountability increases the efficiency and effectiveness of an institutions and equally leading to increased legitimacy and credibility of government. Bird (1992) suggested that to ensure compliance. According to Blinkerhoff.

the difference between management and owners gets thinner and the independency of nonexecutive directors becomes obscured (Rakodi.P. empirical studies indicate that both leaders and subordinates can avoid accountability. Although accountability is viewed as a desirable organizational characteristic by most writers. there is a significant positive relationship between internal controls and financial accountability which means that with effective internal control. Economics. that there was a DE LA SALLE LIPA 1962 J. hold politicians. Lipa City. From the study. improved accountability calls for poor people to increase their formal representation in formal democratic system .STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. This has placed top managers in a difficult position as attempt to devise strategies that will enable their firms to survive and prosper in turbulent environment that require both financial performance and effective stakeholder responsiveness. according to Guixe. in recent years in Uganda. influence resource allocation and working practices more pro-poor and sensitive to gender and other social differences. and to provide assurance that resources are used and authority is exercised according to appropriate and legal procedures. Accountancy and Management of failed or inadequate accountability furnishes the motivation for reform”. to control the misuse and abuse of resources and authority. Laurel Highway. Under such situations. Review of Related Study According to Ntongo (2012). project failures have become a common practice due to poor accountability. Batangas . professional standards. Mataas na Lupa. empirical research demonstrates that pressure for accountability from a multitude of external and internal stakeholders is on an increase to cause adequate service delivery. (2003) and Brown & Moose (2001). According to O’Connell (2002). On applying financial accountability to health service delivery. the accountability issues that emerge can be assessed in terms of purposes of accountability namely. and societal value. 2000). officials and NGO service providers accountable for their performance. However. monitor the performance of those responsible for service delivery. Whereas projects are crucial in the overall success in any economy. better financial accountability can be realized.

it can be helpful in providing on the current issues regarding public misuse of funds and improve the quality of health care services especially in HSIs not only in Lipa City but also in the national level.8% of service delivery (Adjusted R2=0. service provision was inadequate. Improvement in internal controls relatively improves service delivery.000). Thus. Accountancy and Management significant positive relationship between internal controls and service delivery which means that with effective internal control desired service delivery can be achieved. the weak internal controls in the private health sector could not ensure sound financial accountability and this hindered achievement of set goals and thus.2% of variations in service delivery are predicted by other variables not considered in this study. This means that 61. Batangas . Economics. Alternatively. (Ibid) Literature Synthesis The literature stated in this study conveys the internal control framework and its elements. Mataas na Lupa. The gap that the study wanted to address is the mediating effect of financial accountability in relationship to internal control and service delivery on health service institutions in Lipa City. It also defines accountability and financial accountability and the current Philippine health system. It was also established from the study that the combination of internal controls and financial accountability significantly predicted up to 38. With this study. However. Lipa City.P. The research have also manifested that there is a significant positive relationship between financial accountability and service delivery which means that financial accountability increases the efficiency and effectiveness of service delivery in the private health sector. This confirms the findings by Bazzolil (2000) that internal control ensures sound financial management which leads to the attainment of set goals. Laurel Highway. if there is no accountability.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. set goals cannot be achieved and service provision will be inadequate. Σ=0.388. it was indicated that internal controls is the most significant predictor of service delivery as compared to financial accountability. DE LA SALLE LIPA 1962 J.

Research Design The study employed descriptive design to analyze the research problems and objectives of the study. The researchers’ focus is on the ten health service institutions (HSIs) in the vicinity of Lipa City which are: a. Respondents of the Study The respondents of the study will be the ten (10) accounting department heads and its staff of the health service institutions in Lipa City. It will also show in this chapter the methods of how the data are collected. Lipa District Hospital b. Lipa City. Descriptive design will be used to present the profile of the respondents of the study whom are the accounting department heads and staff of the health service institutions (HSIs). Economics. will be used to present the mediating effect of financial accountability in relationship of internal control to service delivery of HSIs. Fernando Air Base District Hospital c.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. Batangas . Mataas na Lupa. Quantitative research. on the other hand. Ospital ng Lipa DE LA SALLE LIPA 1962 J. These include statistical tool and scales to get the general response of accounting department heads regarding the mediating effect of financial accountability in relationship to internal control and service delivery of health service institutions. Laurel Highway. Accountancy and Management CHAPTER III RESEARCH METHOD This chapter tackles the research design and sampling design of the study.P.

Accountancy and Management d. risk assessment. The survey is divided into four parts. e.L. Batangas .P. h. Financial Accountability and Service Delivery in Private Health Providers of Kampala District” of Ntongo (2012) that will be distributed to the respondents. information and communication and monitoring and evaluation. DE LA SALLE LIPA 1962 J. The second part will be about the internal control which will be subdivided into five subparts. control activities. Villa Memorial Medical Center Divine Love General Hospital Mary Mediatrix Medical Center LipaMedix Medical Center Metro Lipa Medical Center San Antonio Medical Center Lipa Doctor’s Hospital The following health service institutions (HSIs) in Lipa City will be surveyed for this research. There are eleven (11) questions about control environment. Economics.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. Mataas na Lupa. thirteen (13) on control activities. i. The third part of the questionnaire focuses mainly on financial accountability. j. f. Lipa City. Research Tool and Instrument The primary data will be gathered from the answers to the survey questionnaire adapted from the study “ Internal Controls. Laurel Highway. N. The first part will be the profiling of the respondents which are the representatives of accounting department of the aforementioned health service institutions. g. These are control environment. Batangas where the subject health service institutions stated above are located. It has fifteen (15) questions. twelve (12) on assessment. Locale of the Study The research will take place in Lipa City. thirteen (13) on information and communication and eight (8) on monitoring and evaluation.

It is subdivided into two parts. It will then be consolidated to determine the respondent’s answers to the research questions of the study. namely: service satisfaction and service quality on which it has twelve (12) and eleven (11) questions respectively. 2.P. blogs and journals will also be used as secondary sources of data. Accountancy and Management Question number four (4) in this section was in negative statement because as adapted. 3. On the other hand. It is a statement which the respondents will show his or her level of agreement or disagreement. the last part will be questions about the service delivery of HSIs. Mataas na Lupa. financial accountability and service delivery. DE LA SALLE LIPA 1962 J. Secondary data will be coming from the list of health service institutions provided by Lipa City Health Office. The five-point Likert scale will be used for the questions regarding internal control. Batangas . The scale is as follows: 5 – Strongly Agree 4 – Agree 3 – Not Sure 2 – Disagree 1 – Strongly Disagree Data Gathering Procedure The researchers performed the following procedures in the conduct of the study: 1.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. Economics. The questionnaire will be given to the representatives of the accounting department of each health service institutions in Lipa City. articles. Lipa City. Books. Laurel Highway. A letter will be forwarded to the accounting department heads of each health service institutions in Lipa City to seek permission for the conduct of the survey.

multiple regression analysis will be used to establish the mediating effect of financial accountabilityin relationship with internal control to service delivery of HSIs in Lipa City. Accountancy and Management Data Analysis and Interpretation Qualitative and quantitative analyses were employed in the study.1. Mataas na Lupa. On the other hand.49 0. These include averages.2. The following table will be used to interpret the correlation analysis: Table 3.P.1 Interpretation Table Range 4. Laurel Highway. Batangas .5 . Lipa City.50 .50-4.49 Response Strongly Agree Agree Not Sure Disagree Strongly Disagree Interpretation Very High High Neutral Low Very Low Pearson correlation analysis will be used to study the relationship between the three variables in the study namely internal control. Economics.50 . frequency counts. financial accountability and service delivery.2 Pearson correlation analysis Interpretation Table DE LA SALLE LIPA 1962 J. simple mean and percentages.00 3.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business.50-5.3.49 2. To get the mean the researchers used the formula below: X = ∑x / N Where: X = mean ∑ = summation symbol X = population X = population size Table 3.49 1.

20 to +. REFERENCES ACCA (2005).39 +. Janmejay.P..70 or higher Interpretation Strong positive relationship Moderate positive relationship Weak positive relationship No or negligible relationship No or negligible relationship weak negative relationship Moderate negative relationship Strong negative relationship Very strong negative relationship To determine the if there is a mediating effect of financial accountability in relationship of internal control on service delivery of health service institutions. Social Accountability: An introduction to the concept and emerging practice.01 to +. Batangas . DE LA SALLE LIPA 1962 J.20 to -.40 to -.01 to -.29 +. Brinkerhoff.29 -. (2003). The Philippine Health System Review. Laurel Highway.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. (2004).40 to +. London: Foulks Lynch. F. Mataas na Lupa.19 -.69 -.30 to +. Accountancy and Management Value +.30 to -.39 -. Reiner. M. and Strategies.. Singh. Lipa City.69 +.19 -. Asia Pacific Observatory on Health Systems and Policies. Managing people. the table above will also be used to interpret this effect. (2011). Framework. Carmen. Economics. Accountability and health systems: Overview.

DE LA SALLE LIPA 1962 J. Lipa City. (2006). Retrieved September 15. (2005). Batangas . (2012). 5-34. Basic Financial Management. & James. Kakuru. 2015. London: Oxford Publisher. from http://www.com/weekender/content.7.com/healthcare-in-the-philippines Ireneo. J. N. (n. Mataas na Lupa. (2015. (2000).. BusinessWorld | The Anatomy of Philippine Health Care: recurring problems. De Guzman.d. Finn. M. A. S. 31(7). M. N. R. Customers as good soldiers: Examining citizenship behaviors in internet service deliveries.P. Journal of management. T. Funding Agency Contribution to Education for all.dpuf Delegation of the European Union of the Philippines.d. C. Accountancy and Management Cox.allianzworldwidecare.). Journal of Business Research. J. No..xZdNL1hS.bworldonline.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. and solutions. Ireneo. & Department of Health Republic of the Philippines. (1998).php? id=114249#sthash. Auditing and Assurance Principles. from http://www. EU and the Philippines: Together towards Universal Health Care.31. (n. August 27). Customer satisfaction cues to support market segmentation and explain switching behavior. pp 5 . 47(3). Retrieved October 19. Vol.). Laurel Highway. (2012). Healthcare in the Philippines.34. challenges. G. & Kayande. Economics. 2015.. Groth. Kampala: MUBS. Manila: FC Arellano Publishing.

Retrieved from ProQuest Dissertations and Theses database. Internal Control and Governance in Non-Governmental Associations Designed to Provide Accountability and Deter. Lipa City. (2012).STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. D. (2007).P. Racaza. CA: Sage Publications DE LA SALLE LIPA 1962 J.). Rossi. Accountancy and Management Kayongo. Internal Controls. (2011). Laurel Highway. Financial Accountability and Service Delivery in Private Health Providers of Kampala District (Doctoral dissertation). Batangas . Evolution. Prevent and Detect Fraud and Corruption (Doctoral dissertation). Thousand Oaks. V. P. H. R. W. R.. Conanan Educational Supply. (1993). Economics. P. Retrieved from ProQuest Dissertations and Theses database. (2004). Auditing Theory for students and practice guide for auditors (4th ed. MU (Unpublished master's thesis). & Evangelista. Mataas na Lupa. Ntongo. A Symmetric Approach. Financial and Entrepreneurial among selected enterprises in Kampala District. Morehead. C.

Mataas na Lupa. Accountancy and Management DE LA SALLE LIPA 1962 J. Laurel Highway. Lipa City. Batangas .P.STUDENT RESEARCH ACCOUNTANCY DEPARTMENT College of Business. Economics.