ACCOUNTING SYSTEM DESIGN AND INSTALLATION

FOR LOPEZ DISTRICT FARMERS’ HOSPITAL, INC.

A Thesis Presented to

The Faculty of the College of Business and Accountancy

University of Negros Occidental – Recoletos

In Partial Fulfillment

of the Requirements for the Degree

Bachelor of Science in Accountancy

Ruffa Lithalla A. Corpus

Thaddeus E. Embile

Scarlet D.Gabayoyo

Philip Andrew Lamaton

Racine Jade A. Rosadia

Leve Marie C. Tabujara

May 2018
 APPROVAL SHEET

This paper entitled ACCOUNTING SYSTEM DESIGN AND INSTALLATION FOR

LOPEZ FARMER’S HOSPITAL, was prepared by

Ruffa Lithalla A. Corpus

Thaddeus E. Embile

Scarlet D.Gabayoyo

Philip Andrew Lamaton

Racine Jade A. Rosadia

Leve Marie C. Tabujara

In partial fulfillment of the requirements for the Degree of Bachelor of Science in accountancy.

This has been reviewed and approved by the Panel of Evaluators of the College of Business and

Accountancy.

PANEL OF EVALUATORS
 ACKNOWLEDGEMENT

Our journey in our Accounting System was not easy but along the way, we are very

blessed and thankful for those who have helped, guided and supported us, encouraging us to

keep on going and to finish this project.

First, we would like to thank our Dear Father in Heaven who gives us all the strength that

we need each day. For all the wisdom, the knowledge and the understanding that He has

showered us with while making our Accounting System. The grace that we have received from

Him is ever sufficient and we are forever grateful.

Second, we would like to thank the Lopez District Farmers Hospital., Inc. (LODIFHI) for

allowing our group to have them as our model for our Accounting System and for providing us

with all the materials and resources that we need. Most importantly we would like to thank

Romy Corpus, CPA for his time to allow us to conduct an interview with him and for helping our

group with this project.

To the Corpus and Rosadia family for allowing us to stay in their home and providing us

a place to sleep and rest our mind. We are beyond grateful for the food that they have prepared

on the table and for feeding our hungry stomachs.

To our parents who have always been with us from the very beginning, cheering us and

motivating us to keep on going. We also thank them for support that we’ve been receiving most

especially financial support.

 To our friends who have helped us in this project and for the support that we’ve been

receiving. Most especially, we thank our friends who are studying Medicine who have helped us

understand the processes in the hospital.

Dr. Clarita T. Lacson, CPA, our adviser, for helping and guiding us with our Accounting

System. We are thankful for all the words of encouragement that she has shared to us and for her

tireless effort of keeping in touch with us along the way. We are grateful for her unwavering

support and confidence in our class that we can finish this work. She showed us her patience

despite the ups and downs of making an Accounting System and by making us understand that

despite the tight time frame, if we will try our best and test our abilities to its limit, we can make

it in due time. She posed a challenge for us, a challenge not for the purpose of defeating us, but a

challenge that will make our minds to think big, to take a risk, to test new waters and to have

faith in God. A challenge meant to proclaim us as victors in faith and in will.

Dennis L. Udani, CPA, REA, REB for monitoring and helping us in our project. We are

especially thankful for the patience that God has blessed you with. We thanked for all the

kindness of teaching us and making us learn more. Thank you for giving us the expertise of

making flowcharts in Visio and giving us ways to perform our task more efficiently and

effectively.

We also acknowledge the people around us, from the busy streets of Bacolod to the Tom

‘N Toms Coffee shop who let us stay for the rest of the night we were there to make this system.

We are thankful as they provide us shelter and security from over the night. For the people who

availed there services and endured our loud voices and disturbance that may have caused them.
 Most of all, we would like to thank each one of us in this group for all the time and effort

that we’ve put through. We faced issues and conflicts that are natural in any group but we

managed to surpass it. Despite our busy schedule, the challenges that we have faced, we still

made it. Without each of our efforts we wouldn’t have accomplished this project. Our spirit will

never waver. Our faith will never fail.

 TABLE OF CONTENTS

Page

Title Page

Approval Sheet

Acknowledgement

Table of Contents

Glossary of Acronyms

List of Tables

List of Figures

Flowcharting Guidelines and Symbols (Table 1.1)

INTRODUCTION

BUSINESS ORGANIZATION

SYSTEM OVERVIEW
REVENUE SUBSYSTEM

EXPENDITURE SUBSYSTEM

PAYROLL SUBSYSTEM

FINANCING SUBSYSTEM

INVESTING SUBSYSTEM

BIR/TAX/GOVERNMENT COMPLIANCE SUBSYSTEM

GENERAL LEDGER SUBSYSTEM

FINANCIAL REPORTING

CHART OF ACCOUNTS

FORMS AND DOCUMENTS

CONCLUSION

RECOMMENDATION
Glossary of Acronyms

AL - Application Letter

CAO - Chief Administrative Officer

CEO - Chief Executive Officer

CFO - Chief Financial Officer

CIR - Credit Investigation Report

CMF - Charge Master File

Cos - Cost Slip

CR - Collection Receipt

CS - Charge Slip

CSR - Central Supply Room

DO - Discharge Order; Doctor’s Order

DR - Doctor’s Referral

DS - Discharge Summary; Deposit Slip

DW - Discharge Waiver
GSIS - Goverment Service Insurance System

HMO – Health Maintenance Organization

ID - Identification Card

MPI - Master Patient Index

OAD – Outpatient Ancillary Department

OR - Official Receipt

PHIC - Phil Health Clerk

PIS - Patient Information Sheet

PN - Promissory Note

PSOA - Patient’s Statement of Accounts

RBMF - Room and Bed Master File

RFPP - Request for Partial Payment

SSS - Social Security System

TR - Temporary Receipt

TRR - Test Result Report

List of Tables

Table 1.1 Business Organization

Table 2.1 Outpatient Services

Table 2.2 Ancillary Outpatient

Table 2.3 Pharmacy

Table 2.4 Admitting

Table 2.5 Central Supply/Pharmacy (Inpatient)

Table 2.6 CSR/Pharmacy Returns

Table 2.7 Ancillary Admitting

Table 2.8 Billing

Table 2.9 Claims from HMO

Table 2.10 Discharge

Table 2.11 Credit Application of Charged Patients

Table 2.12 Collection of Claims from Credit Patients (Thru Cashier)

Table 2.13 Collection of Claims from Credit Patients (If Thru Collectors)

Table 2.14 Collection of Claims from PhilHealth

Table 2.15 Remittance to Head Cashier

Table 2.16 Monitoring of Patient’s Current Account

Table 2.17 Monitoring of Due Accounts

Table 3.1 Purchase of Supplies/Inventories

TABLE 3.2 Bidding for New Supplies/Inventories

Table 3.3 Receipt of Supplies/Inventories

Table 3.4 Purchase Returns

Table 3.5 Issuance of Supplies/Inventories to Other Department

Table 3.6 Vouchers Preparation Procedure

Table 3.7 Refund Procedures

Table 3.8 Petty Cash/ Revolving Fund Disbursement Procedures

Table 3.9 Petty Cash/ Revolving Fund Liquidation Procedures

Table 3.10 Petty Cash/ Revolving Fund Replenishment Procedures

Table 3.11 Check Disbursement

Table 4.1 Payroll

Table 5.1 Loan Application

Table 5.2 Receipt of Loan

Table 5.3 Loan Settlement

Table 6.1 Fixed Asset Acquisition

Table 7.1 Cash Sales

Table 7.2 Reconciliation System of Payroll Cycle

Table 7.3 Purchase of Inventories

Table 7.4 Acquisition of Fixed Assets

Table 7.5 Preparation of Bank Reconciliation

Table 7.6 Inventory Count

Table 7.7 Physical Asset Count

Table 7.8 General Ledger and Reporting System

Table 8.1 Financial Reporting Presentation

Table 9.1 General Assets

Table 9.2 Specific Assets

List of Figures

Figure 1.1 Business Organization

Figure 2.1 Outpatient Services

Figure 2.2 Ancillary Outpatient

Figure 2.3 Pharmacy

Figure 2.4 Admitting

Figure 2.5 Central Supply/Pharmacy (Inpatient)

Figure 2.6 CSR/Pharmacy Returns

Figure 2.7 Ancillary Admitting

Figure 2.8 Billing

Figure 2.9 Claims from HMO

Figure 2.10 Discharge

Figure 2.11 Credit Application of Charged Patients

Figure 2.12 Collection of Claims from Credit Patients (Thru Cashier)

Figure 2.13 Collection of Claims from Credit Patients (If Thru Collectors)

Figure 2.14 Collection of Claims from Philhealth

Figure 2.15 Remittance to Head Cashier

Figure 2.16 Monitoring of Patient’s Current Account

Figure 2.17 Monitoring of Due Accounts

Figure 3.1 Purchase of Supplies/Inventories

FIGURE 3.2 Bidding for New Supplies/Inventories

Figure 3.3 Receipt of Supplies/Inventories

Figure 3.4 Purchase Returns

Figure 3.5 Issuance of Supplies/Inventories to Other Department

Figure 3.6 Vouchers Preparation Procedure

Figure 3.7 Refund Procedures

Figure 3.8 Petty Cash/ Revolving Fund Disbursement Procedures

Figure 3.9 Petty Cash/ Revolving Fund Liquidation Procedures

Figure 3.10 Petty Cash/ Revolving Fund Replenishment Procedures

Figure 3.11 Check Disbursement

Figure 4.1 Payroll

Figure 5.1 Loan Application

Figure 5.2 Receipt of Loan

Figure 5.3 Loan Settlement

Figure 6.1 Fixed Asset Acquisition

Figure 7.1 Cash Sales

Figure 7.2 Reconciliation System of Payroll Cycle

Figure 7.3 Purchase of Inventories

Figure 7.4 Acquisition of Fixed Assets

Figure 7.5 Preparation of Bank Reconciliation

Figure 7.6 Inventory Count

Figure 7.7 Physical Asset Count

Figure 7.8 General Ledger and Reporting System

Figure 8.1 Financial Reporting Presentation

Glossary of Terms

This section provides the conceptual and operational definitions of terms used for the

readers to understand the paper clearly.

Accounting System. Conceptually, an accounting system is composed of the people, records,

and methods used in collecting financial information about business events which are recorded,

processed into a useful form, and communicated to end users and decision makers.

Operationally, an accounting system enables a business to keep track of all types of financial

transactions. It gives rise to comprehensive statistical reports that provide the management or

interested parties with a clear set of data to aid in the decision-making process.

Internal Control. Conceptually, internal control is a process determined by an entity’s board of

directors, management and other personnel for assuring achievement of an organization's

objectives in operational effectiveness and efficiency, reliable financial reporting, and

compliance with applicable laws, regulations and policies. Operationally, internal control is used

to help a department achieve its mission and accomplish certain goals and objectives.

Source Documents. Conceptually, source documents are the original business documents used

in tracking business transactions such as invoices, purchase orders, and receipts. Operationally,
source documents are the keys in ensuring that proper and accurate transactions are posted to the

accounting system. These are the proofs that a financial transaction took place during audit.

Transaction. Conceptually, a transaction is an agreement between a buyer and a seller to

exchange goods, services or financial instruments. Operationally, a transaction is a business

event that has a monetary impact on an entity's financial statements, and is recorded as an entry

in its accounting records.

Procurement. It is defined as the process of acquiring supplies through purchases from the

manufacturers, their agents like distributors or from private or public suppliers.

Medical Ancillary. They refer to the wide range of healthcare services provided to support the

work of a primary physician. These are support services other than room, board, medical and

nursing services that are provided to hospital patients in the course of care. They include such

services as laboratory, radiology, pharmacy, and physical therapy services.

Support Services. These refer to the non-health care-related ancillary services such as

Housekeeping, Linen and Laundry, and Engineer and Maintenance services.

Central Supply Room. It is a unit in the hospital which issues sterile supplies and most of the

special equipment needed in the care of patients.

Hospital Pharmacy. It is the health care service, which comprises the art, practice, and

profession of choosing, preparing, storing, compounding, and dispensing medicines and medical

devices, advising healthcare professionals and patients on their safe, effective and efficient use. It

typically provides medications for the hospitalized patients only, and are not retail

establishments. Thus, it does not provide prescription service to the public.

Resident on Duty. Also known as a resident doctor, a Resident on Duty is a physician who

practices medicine, usually in a hospital or clinic, under the direct or indirect supervision of an

attending physician.

Charge Slip. It serves as the data collection tool for commencing the billing process. It reflects

the services performed and any associated charges. It is a historical record that is used in the

event a charge must be researched to identify any discrepancy or billing errors.

Flowcharting Guidelines and Symbols

Flowcharting

Flowcharting is a tool for analyzing processes. A flowchart is a visual representation of

the separate steps and decisions necessary to perform a process, which is presented in a

sequential order. Each step in the sequence is noted within a diagram shape. Steps are linked by

connecting lines and directional arrows. This allows anyone to view the flowchart and logically

follow the process from beginning to end.

The use of flowchart brings various advantages. Persons involved throughout an

organization can easily comprehend the workflow while finding out which step is unnecessary

and which progress should be improved. It provides an easy, visual method in order to help the

persons involved understand what they should do step by step. With the help of flowchart,

problems can be analyzed in more effective way since it shows what type of action each step in a

process requires.

Each cycle has a separate system flowchart. The vertical columns represent the different

departments involved in processing the transactions.

 INTRODUCTION

The Hospital Industry

Hospitals are health care institutions that have an organized medical and other

professional staff,  inpatient and outpatient facilities, and deliver services 24 hours per day, 7

days per week. They offer a varying range of medical and surgical services and the supporting

laboratories, equipment and personnel that make up the medical and surgical mission of a

hospital.

Water, sanitation and hygiene (WASH) in health care facilities are fundamental for the

provision of quality, people-centered care. Such services also reduce health care-related

infections, increase trust and uptake of services, increase efficiency and decrease cost of service

delivery and improve staff morale. All major initiatives to improve global health depend on basic

WASH services in health care facilities.

In the Philippines, hospitals play an important role to the country in providing healthcare

services such as the treatment of different health related problems and as well as raise awareness

on preventing diseases and maintaining suitable sanitation. Hospitals are even more significant to

underdeveloped areas since usually; these types of areas don’t have proper development on
sanitation and unfortunately, allows for widespread diseases to occur in the area and hospitals

make sure that things like that doesn’t happen and the public stays safe and  relatively clean.

Hospitals need to be organized around people’s needs, working closely with other health

and social care services and contributing to strengthening primary health care and service. They

are vital in the survival and the advancement of the community since they treat and resolve one

of the most basic problems of society which is health. Furthermore the most basic importance of

hospitals is that they save countless lives that would have otherwise been lost without the

intervention of these establishments. Without hospitals, society cannot function efficiently and

diseases would more likely to spread and affect the population.

Company Overview

COMPANY NAME: Lopez District Farmers Hospital, Inc.

FORM OF ORGANIZATION: Non-stock and  Non-profit Organization

ADDRESS: National Highway, Poblacion 2, Sagay City, Negros Occidental

TELEPHONE NUMBER: (034) 488 0868

INDUSTRY: Medical & Health

Lopez District Farmers’ Hospital, Incorporated most commonly known as LODIFHI is a

small but passionate hospital located in the city of Sagay. It is a non-stock non-profit form of an

organization. The hospital offers various medical services such as surgery, medicine, pediatrics,

OB-gynecology, and anesthesiology; nursing services such as inpatient and outpatient services,

operating and receiving room services and midwifery. In addition, the hospital also provides

ancillary services including pharmaceutical, laboratory and radiology. In support of their

operations, they also provide housekeeping, linen and laundry, and dietary services which are

vital functions for a hospital to work effectively.

It is a well-known and respected hospital among the citizens of the city of Sagay and the

people look up and respect its staffs for being professionals in their craft and at the same time

being compassionate towards the sick.

Services Offered

I.                   Medical Services

1.      Surgery

2.      Medicine
 3.      Pediatric

4.      OB-Gynecology

5.      Anesthesiology

II.                Nursing Services

1.      In-patient Services

2.      Out-patient Services

3.      Operating Room  Services

4.      Receiving Room Services

5.      Midwifery

III.             Ancillary Services

1.      Pharmaceutical Services

2.      Laboratoty Services

3.      Radiology Services

IV.             Support Services

1.      Housekeeping

2.      Linen and Laundry

3.      Dietary
Vision and Mission Statement

Vision

“Be a center of excellence in health care for Northern Negros.”

Mission

“To give the extra mile in our commitment to excellence in providing medical care.”

Company CSR

 Blood Donation - This activity consists of finding enthusiastic volunteers who are more

than happy to donate their blood in order for the hospital to have adequate supply of

blood for those patients who need it.

 Medical Mission - A free full medical check up to the public. Especially, for those who

cannot afford check ups and persons who have little to no access on medical facilities.

 Operation Tuli - One CSR of the hospital is to circumcise males during summer for free

especially for those who are in financial incapable.

 Operation Smile - This CSR project of the hospital is to give free dental check ups and

operations to the community in order for the public to have a good smile hence the name

 Fasting Blood Glucose tests - A free check up for the neighborhood for diabetes and

complementary medical advice for those who are positive to have one.

AIS Description and Objective

Our proposed accounting information system is aimed at the hospital’s ability to properly

manage their day-to-day transactions and accommodate all data that flows through and out of the

Hospital. It is prepared also to improve and fasten the process converting all transactions that
came from the overall operation of the hospital. The proposed system is an overhaul of the

existing hospital system and will eliminate unnecessary processes and networks that will cause

disorder between transactions.

The accounting information system aims to target all departments and services in the

hospital. From the general operations to outpatient, admitting to billing, laboratory to records and

more. It aims to neutralize threats within and outside the system, reduced data errors, eliminate

fraud and data redundancy. Establish a path for audit trails that would produce documentary

evidence about the flow hospital data through its corresponding destinations: to keep source

documents, computer files and hospital records to be traced and to show hospital transactions are

being handled.

The main objectives of the accounting information system are accountability, transparency,

efficient data security and efficient performance that would, undoubtedly, command greater

capability for the general operations and transactions of the Hospital. Such system will also

deliver the proper flow authority and responsibility throughout the hospital. This will enhance

their ability to efficiently deliver the needs of its patients and respond to any needs and problems

that may arise within the entity.

EMERGENCY ROOM

PHARMACY
 X-RAY

LABORATORY
OPERATING ROOM

PRIVATE ROOMS
BUSINESS ORGANIZATION
SYSTEM OVERVIEW