Passed 102215

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
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
ABSTRACT
ii
LIST OF TABLES
LIST OF FIGURES
vi
LIST OF APPENDICES
vii
Chapter
1
BACKGROUND OF THE STUDY
Introduction
Statement of Research Problem
DE LA SALLE LIPA
1962 J.P. Laurel Highway, Mataas na Lupa, Lipa City, Batangas
STUDENT RESEARCH
Objectives of the Study............... 3
Research Framework ....................
1.1 Conceptual Framework
1.2 Operational Framework
Hypotheses.
Significance of the Study..
Scope and Limitations .
Operational Definitions
REVIEW OF RELATED LITERATURE

Internal Control Framework...
.
Accountability...
14
Philippine Health System ...

...
17
2.1 Effect / Relationship / Influence / Association
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
STUDENT RESEARCH
REFERENCES
APPENDICES
LIST OF TABLES
Table
Page
Interpretation Table....................................................................
27
Pearson correlation analysis Interpretation Table....................
28
DE LA SALLE LIPA
STUDENT RESEARCH
DE LA SALLE LIPA
STUDENT RESEARCH
LIST OF FIGURES
Figures
Page
Conceptual Framework
Operational Framework
DE LA SALLE LIPA
STUDENT RESEARCH
LIST OF APPENDICES
Appendix
A
Questionnaire
DE LA SALLE LIPA
STUDENT RESEARCH
CHAPTER I
INTRODUCTION
Background of the Study

Numerous fraudulent activities have surfaced in this current age of the business
world. And during this age when people are becoming more dependent on the products
and services being given by businesses, the quality of products and services being
offered to the public is placed in doubt. This is the reason why in this point of time,
following the occurrence of numerous global financial scandals, the essence and
presence of internal control measures in businesses has become more necessary. In a
sense, 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.
Internal Control, according to PSA 315, 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 entitys goals and objectives, with reliability in terms of
financial reporting, effectiveness and efficiency of operations and compliance with
necessary laws and regulations. The primary components of a desirable Internal Control
system are control environment, risk assessment, information and communication and
monitoring of activities. Though Internal Control is conveniently aligned with the work of
accountants and auditors, it is the individuals that is given the responsibility of managing
the business that has significant influence in assessing and implementing such control.
As a developing country, the Philippines is not in perfect shape in terms of
providing quality health services, especially, by Health Service Institutions (referred to as
HSIs in this paper, henceforth), specifically, hospitals and local health clinics. It is
because as published in the Philippines Health System Review (2011), total health
spending was 3.9% of Gross Domestic Product (GDP) which was relatively low
DE LA SALLE LIPA
STUDENT RESEARCH
compared to Western Pacific regional average of 6.9%. This means that health care
services does not receive much attention when it comes to expenditures for the year.
Numerous complaints regarding delays, combined with low quality, of services has been
the primary concern of this country in its deliverance of better health care for people.
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, with well-stocked supplies and drugs
and health care providers who are well-educated and competent.
Provision of health care, in the Philippine Setting, is constantly being monitored
and funded by the government. 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. This program was
considered a success, in terms of enrolment. (Oberman et.al, 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, 35% from Visayas and 22% in Mindanao.
However, there is a continuing discontent among the people regarding the quality
of health services provided to them. There are reports that some HSIs have an untimely
manner of responding to the immediate needs of patients. Some complaints also
included the selection of people who would treated, depending on the capacity to pay for
the services that the patient requires. Other disturbing news of misappropriation and
misusage of medical facilities and resources have surfaced. These are the reasons why
the necessity to check on the Internal Control Measures of HSIs have surfaced, 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.
DE LA SALLE LIPA
STUDENT RESEARCH
Statement of the Research Problems

With the initial findings of the researchers, 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 profile of the respondent?
2. AWhat is the relationship between internal control and financial accountability of
HSIs in Lipa City, Batangas?
3. What is the relationship between internal control and service delivery of HSIs in
Lipa City, Batangas?
4. What is the relationship between financial accountability and service delivery of
HSIs in Lipa City, Batangas?
5. 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, intends to achieve the following objectives:
1. To examine the relationship between internal control and financial accountability
of HSIs in Lipa City, Batangas.
DE LA SALLE LIPA
STUDENT RESEARCH
2. To examine the relationship between internal control and service delivery of HSIs
in Lipa City, Batangas.
3. To examine the relationship between financial accountabiliy and service delivery
of HSIs in Lipa City, Batangas.
4. To assess whether financial accountability has a mediating effect on the
relationship of internal control and service delivery.
Conceptual Framework
Figure 1.1 Internal Controls, Financial Accountability and Service Delivery in Private Health Providers of Kampala District
(Ntongo, 2012).
This is the conceptual framework from the dissertation of Ntongo (2012) entitled
Internal Controls, 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), which explains the importance of Corporate
Governance and its role in creating an effective Internal Control. Basically, it shows the
relationship of the three major concepts of the paper; internal control, financial
accountability and service delivery. In this diagram, it shows that there is a connection
between the presence of Internal Controls and Service Delivery. There is also an
enumeration of the factors that are being considered for Internal Control, namely the
Control
Environment,
Control
Activities,
Risk
Assessment,
Information
DE LA SALLE LIPA
and
STUDENT RESEARCH
Communication and Monitoring and Evaluation; and for Service Delivery, such as
Quality, Timeliness, Satisfaction and Efficiency. The presence of Financial Accountability
in the middle of Internal Control and Service Delivery serves a mediating effect between
the two.
Operational Framework
Figure 1.2 Adapted Framework from the dissertation entitled Internal Controls, Financial Accountability and Service
Delivery in Private Health Providers of Kampala District (Ntongo, 2012)
The flowchart in figure 1.2 will be the frame that will be used in the conduct and
analysis of this research. It is an adaptation of the dissertation of Ntongo (2012), with
certain revisions to the framework, in order to compliment the questionnaire that will be
used for this research. Though it is essentially the same, 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, Timeliness,
Satisfaction and Efficiency).
Hypothesis
To assess the mediating effect of financial accountability in relationship of internal
control to service delivery of health service institutions of Lipa City, the following
DE LA SALLE LIPA
STUDENT RESEARCH
hypothesis were formulated to serve as guides and foundations for the assessment and
investigation.
HO: Financial Accountability has no effect on the relationship of Internal Control to
Service Delivery of Health Service Institutions in Lipa City.
Significance of the Study

The results of the study may lead to:
1. Providing a foundation for further improvement of internal control,
financial accountability and service delivery of HSIs.
2. 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, Batangas.
3. Providing more literature and research regarding internal control, service
delivery and financial accountability in the context related to providing
health services by health service institutions.
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.
Geographical Scope
The study shall be limited to HSIs within the vicinity of Lipa City, Batangas.
Respondents of the Study
DE LA SALLE LIPA
STUDENT RESEARCH
The study will involve the knowledge and perspective of those in-charge of
governance of HSIs in Lipa City, Batangas, since they are the ones who are
more than capable of giving a relevant insight on internal control.
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, but for the purpose of operationalizing the concepts in this study, the following
terms will be interpreted as follows:
Financial Accountability a concept that deals with the proper utilization,

supervision and allocation of financial resources of an organization, 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, improving

business operations and enhancing the credibility of financial reports and
information provided by the business.
.
Service Delivery the ability of an entity to provide the services to its customers,
in which the level of success of the entity depends on the level of satisfaction of
the customers.
DE LA SALLE LIPA
STUDENT RESEARCH
CHAPTER II
REVIEW OF RELATED LITERATURE
This chapter will present literature reviews related to internal control, financial
accountability, service delivery, health care institutions in the Philippines. Literature and
studies presented in this chapter contain information, concepts, theories, findings and
trends that are contributory and fitting for the operational framework of the study.
Internal Control Framework

According to COSO (2013) the framework for internal control is composed of five
interrelated elements. These are derived from the way management runs a business,
and are integrated with the management process. Although the components apply to all
entities, small and mid-size companies may implement them differently than large ones.
Its controls may be less formal and less structured, yet a small company canstill have
effective internal control. These elements are: (1) control environment, (2) risk
assessment, (3) information and communication, (4) control activities, and (5) monitoring
and evaluation.
Internal control is broadly defined as a process, effected by an entity's board of
directors,management and other personnel, designed to provide reasonable assurance
regarding theachievement of objectives in the following categories: (1) Effectiveness and
efficiency of operations, (2) Reliability of financial reporting. (3) Compliance with
applicable laws and regulations.
The first category addresses an entity's basic business objectives, including
performance andprofitability goals and safeguarding of resources. The second relates to
DE LA SALLE LIPA
STUDENT RESEARCH
the preparation ofreliable published financial statements, including interim and
condensed financial statements and selected financial data derived from such
statements, such as earnings releases, reported publicly. The third deals with complying
with those laws and regulations to which the entity is subject. These distinct but
overlapping categories address different needs and allow a directed focus to meet the
separate needs.
According to Ireneo, et al (2012), internal control is a process and a tool of the
managementwhich is conducted within or across organizational functions. It is effected
by those charged with governance, management and other personnel of the entity.
Reasonable assurance is expected to be the fruit of this function and that it is geared
towards the achievement of an entitys objectives.
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. (Ibid)
McNally (2013) stressed about the requirements of effective internal control. In
order for the management to conclude that its system of internal control is effective, 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. The presence implies a given component or principle exists within the design
and implementation of an entitys system of internal control. The term functioning implies
that the component or principle continuously exist in the operations and conduct of the
control system. 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.
Control environment
DE LA SALLE LIPA
STUDENT RESEARCH
According to the Revised Code of Corporate Governance of the Philippine
Securities and Exchange Commission, 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; (2) a management that actively manages and
operates the company in a sound and prudent manner; (3) the organizational and
procedural controls supported by an effective management information system and risk
management reporting systems; and (4) an independent audit mechanisms to monitor
the adequacy and effectiveness and efficiency of operations, safeguarding of assets,
and compliance with law, rules, regulations, and contracts.
According to PSA 315, control environment encompasses the following factors:
communication and enforcement of integrity and ethical values; commitment to
competence; participation by those charged with governance; managements philosophy
and operating style; organizational structure; assignment of authority and responsibility;
human resources policies and practices. Although all are important, the extent to which
each is addressed will vary within the entity.
According to Evangelista and Racaza (2011), it is utmost a consideration to
create a culture which stresses integrity and ethical values among the members of the
organization. Each corporation should have should have its own corporate culture,
general beliefs, practices and attitude of employees; this culture either promotes or
hinders ethical behavior. Added to this, members of the organization who are
professional accountants must comply with the Code of Ethics for Professional
Accountants in the Philippines.
Competence comprises the knowledge and skill needed to accomplish the
assigned tasks. Furthermore, the management should consider the competence levels
for particular jobs and how those levels turn into skills and knowledge. Control
environment is significantly initiated by the board of directors and the audit committee
being those charged with corporate governance. (Ibid)
DE LA SALLE LIPA
STUDENT RESEARCH
The beginning and ending of an organizations effective internal control is the
managements philosophy and operating style. Included are the managements (a)
approach to taking business risks, (b) attitudes and actions toward financial reporting,
information processing and accounting functions of personnel, and (c) emphasis on
meeting budget and operating goals. The more responsible that management
philosophy and operating style are executed, the more likely it is that employees will
behave responsibly in working to attain organizational objectives. In line with the
operating style and management philosophy, assignment of authority and responsibility
within an organization should be congruent to the former. (Ibid)
Organizational structures influence control environment to the extent at which
employees recognize that they will be held accountable. Also, establishment of policies
relating to the delegation of authority to management and other employees is sufficient
proof of a positive control environment. (Ibid)
Internal audit function can strengthen the control environment up to the extent in
which the employees adhere to the internal control policies. Human resource policies
and practices describe the recruitment, training, evaluation, promotion and
compensation to employees. Effectiveness of internal control relies on the honesty and
the abilities of the employees. (Ibid)
Risk assessment
According to Ireneo, et al., risk assessment is the identification and analysis of
relevant risks to achievement of the objectives, forming a basis for identifying how the
risks should be managed. The risk assessment process is composed of three steps: risk
identification, risk analysis and risk management. Under risk identification, risks are from
both internal and external factors. After identification, risks are analyzed and managed.
DE LA SALLE LIPA
STUDENT RESEARCH
Information Systems and Communication
According to Evangelista and Racaza, to beeffective, an internal control system
must provide relevant and timely information and communication. The system should be
able to identify the information requirements and create and information system that
provides the needed data and reports.
According to PSA 315 Appendix 2, par. 14, communication involves providing an
understanding of individual roles and responsibilities pertaining to internal control over
financial reporting. Added to this, 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. Open
communication channels help ensure that exceptions are reported and acted on.
According to Ireneo, et al, communication of information is through multiple
media such as policy manuals, memoranda, bulletin board notices and videotaped
messages. Information can also be transmitted orally through announcements and
meetings. A more powerful medium aside from the oral and written information
communication is through the manner of dealing with subordinates. Somehow, this is a
reflection of the clich, Action speaks louder than words.
An entity found to be having a long and rich history of operating with integrity,
and whose culture is well understood by people throughout the organization, will likely
find little difficulty in communicating its message. An entity without such a tradition will
likely need to put more effort into the way messages are communicated (Ibid).
Control activities
According to Ireneo, et al, control activities are being referred to as the policies
and procedures implemented in the organization to ensure that managements goals and
DE LA SALLE LIPA
STUDENT RESEARCH
objectives are met by ensuring that their directives are identifies as necessary to
address risks are carried out. Control activities are divided into three overlapping
categories, operations, financial reporting and compliance.
Monitoring and evaluation

According to Ireneo, et al, monitoring of controls is a process to evaluating the
quality of internal control performances over time. It also involves the assessment of the
design and operation of controls on a timely basis and taking into consideration the
necessary corrective actions. Monitoring is done to ensure that controls continue to
operate effectively. Monitoring ensures that internal control continues to operate
effectively. Also, because internal control systems adapt to technology, innovations and
time to suffice the needs of firms. As a result, monitoring also changes based on
improvements and changes to address new risks.
Monitoring is a continuous periodic observation of the execution of a task. Not
only should the physical progress of the project be monitored, but also the impact of the
project. There should be one format for monitoring and reporting throughout the life of
the project. This will aid in providing a solid basis for the analysis of trends and definition
of strategies, and will be particularly useful when there is a change of personnel,
management, and policy makers. Changes in external factors which are pertinent to the
development of the project should also be registered in the progress report. The
progress report provides major information input to the project review (NADC, 1996).
Walker, Shenkir & Buton (2003) mentioned that monitoring processes are used to
assess the quality ofinternal control performance over time. Monitoring is the evaluation
of internal control performances over time. It is accomplished by an on-going monitoring
of activities and by separate evaluations of internal control such as self-assessments,
peer reviews, and internal audits. According to Athony (2004), the essence of monitoring
is to determine whether internal control is sufficiently designed, properly executed, and
DE LA SALLE LIPA
STUDENT RESEARCH
effective. Internal control is adequately designed and properly executed if all the five
control components (control environment, control activities,risk assessment, information
and communication and monitoring) are evident and functioning asdesigned. Internal
control is effective if management and interested stake holders have reasonable
assurance that they understand the extent to which operational objectives are
achieved, .published financial statements are being prepared reliably, applicable laws
and regulations are being compiled.
Accountability
According to Frost (2000) accountability is referred to the liability assumed for
ensuring that an obligation to perform a responsibility is achieved.Accountability is the
ability to supply a justification and accept responsibility for events or transactions and
ones ownactions relative to these events or transactions (KIkonyogo, 1999).
Accountability can be analyzed at the individual, organizational, and general
levels. In his view, accountability is like a Semantic tree: the trunk is governance; a main
branch is financial accountability which feeds other branches such as budgeting,
accounting, auditing, and records management (Munene, 2004).
Accountability is described to be an organizations ability to exhibit, answer, or
justify its actions(Green 2003). Anderson (2009) stressed that one of the elusive
concepts in management is accountability. The gist of accountability is answerability;
being liable to answer questions regarding decisions and or actions (Schedler, 1999).
Those responsible should be able to answer the questions and face the consequences
of their decisions.
Another defining element of accountability is the availability and application of
sanctions on inappropriate actions and behavior uncovered through answerability.
Answerability without sanctions is generally considered to be weak accountability and,
DE LA SALLE LIPA
STUDENT RESEARCH
sanctions without enforcement significantly diminish accountability, according to
Blinkerhoff (2003). Most people tend to liken sanctions to requirements, standards and
penalties embedded in laws, statutes and regulations. Furthermore, 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. What has been spent must be ensured
with proper documents. According to Roque (2013) a budget is a set of interlinked plans
that quantitatively describe an entity's projected future operations.In another standpoint,
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.
Cox (2000), Bothwell (2001) and Malinga (2002) noted that financial
accountability implies accountability to the public. In essence, 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, ethical standards and good governance. The function of transparency is
important in accountability and it refers to openness. Transparence is an essential
aspect of ensuring accountability, minimizing corruption, and has gained prominence in
organizations for economic corporation and development (OECD, 2002).
Service Delivery
DE LA SALLE LIPA
STUDENT RESEARCH
Morgan (2005) have insisted that service delivery has to be communicated over
and over again to everyone. Employees at all levels must be parallel with a single vision
of what the organization is trying to fulfill. Thus, effective internal communications is the
requisite for integration and harmony in the service organizations activities and quality.
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. He also added that data
collection and evaluation are a means by which organizations can assess their progress
on these two forms.
According to Finn & Kayande(2006) a service is an activity or a series of
activities of more or less intangible nature that normally, but not necessarily, takes place
in interactions between the customer and service employees and/or systems of service
providers, which are provided as solutions to customer problems.
Service delivery can be taken to be an outcome of performance depending on
the context in which it is used (Ayen, 2002). According to Samuel (2002), service can
beexpressed in terms of capacity to deliver desired services and from which customers
get satisfaction. A service delivery gap is that gap between the established delivery
standards and the actual service delivered (Crosby, 2000). It is an inconsistency
between service design/ quality specifications and the actual service quality by the
service delivery system. Effective engagement between citizens, service providers and
elected representatives is essential to democratic service delivery. As competition in the
service industry flourishes, delivering high quality service to meet customersneeds is
essential for success (Porter, 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).This is because satisfaction has a positive
relationship to patients future decision to return to a facility to receive service. Service
provision that is de-linked from citizen influence and democratic decision making is
unlikely to deliver quality services for the poor. For meaningful contributions, the poor
DE LA SALLE LIPA
STUDENT RESEARCH
require the ability and capacity to ask questions and, sufficient information of their right
and entitlements, service options, local and national budgets, and the systems to
address when decisions are taken undemocratically or when services are of poor quality.
Philippine Health System

According to Romualdez, 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, the prevalence of communicable diseases has fallen and life expectancy has
increased to over 70 years. However, inequities must be considered in health care
access and outcomes between socio-economic groups still remain. A major driver of
inequity is the high cost of accessing and using health care. The Philippines has had a
national health insurance agency PhilHealth since 1995 and incrementally increased
population coverage, but the limited breadth and depth of coverage has resulted in high
levels of out-of-pocket payments. In July 2010 a major reform effort aimed at achieving
universal coverage was launched, which focused on increasing the number of poor
families enrolled inPhilHealth, providing a more comprehensive benefits package and
reducing or eliminating copayments.
Attracting and retaining staff in under-served areas is key challenge.
ThePhilippines is a major exporter of health workers, yet some rural and poor areas still
face critical shortages. Inefficiency in service delivery persistsas patient referral system
and gatekeeping do not work well. Successive reform efforts in financing, service
delivery and regulation have attempted to tackle these and other inefficiencies and
inequalities in the health system. But implementation has been challenged by the
decentralized environment and the presence of a large private sector, often creating
fragmentation and variation in the quality of services across the country (Ibid).
According to Herrera, et al (n.d.), health sectors from both public and private
sectors have been forming partnerships to provide better quality of health care for the
Filipinos. In their research, Overview of Health Sector Reform in the Philippines and
DE LA SALLE LIPA
STUDENT RESEARCH
Possible Opportunities for Public-Private Partnerships, The Philippine health sector
exists in a context of persistent poverty and financial challenges. As of 2009, the
Philippines had a national poverty index of 20.9%, with many of the poorest spending for
medical care out-of-pocket. The government has established a National Health
Insurance Program (NHIP) to provide accessibility to health care to Filipinos, but
contentious coverage issues as well as lack of facilities and trained medical personnel
are continuing hindrances for the program. Health sector and hospital reform programs
instituted bythe government have yielded some positive results, but the Philippines is still
far from achieving its goal of a sustainable, high quality, and cost-efficient healthcare
system that canbe accessed by all Filipinos.
According to de Guzman (2015), as per World Health Organizations (WHO)
recommendation, there should be 20 bed in a hospital per 10,000 people. Hospital beds,
are insufficient based on the national population of 100 million. Also, the Autonomous
Region in Muslim Mindanao (ARMM) was found to have the worst health system in the
country, having the same health care level with Africa. Private hospitals have
outnumbered government-owned hospitals in all levels. The Department of Health (DoH)
have classified HSIs into four categories from being similar to infirmaries up to those with
advanced technology.
According to Allianz Health Care, Inc., (n.d.) 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. Medical practitioners in the Philippines are
graduates from premiere medical universities in the United States. Also, before
practicing their profession in the Philippines, they first acquire experience through
practice in the US. Nurses have also been trained with excellent standards. Private and
public hospitals in the Philippines differ in facilities and technology. Cost of medications
and hospitalizations are not that expensive in the country.
The most noticeable health care issue in the Philippines is illegal drug use. Also,
malnutrition is one concern on the countrys health care. (Ibid)
DE LA SALLE LIPA
STUDENT RESEARCH
Internal Control and Financial Accountability

The dissertation of William Alonzo Morehead, entitled Internal Control and
Governance in Non-Governmental Associations Designed to Provide Accountability and
Deter, Prevent and Detect Fraud and Corruption is the basis of the relevance of internal
control with financial accountability. In the aforementioned study, the presence of a
strong internal control measure is way that helps any entity to demonstrate
accountability. 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, goals and objectives. It thus
give importance to the role of having a strong internal control on having financial
accountability as its core principles of an organization. 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.
According to Gendion, Cooper &Townley (2000), internal control is a
management function that is crucial for proper accountability and, accountability for all
funds should be maintained at all times (Chen, 2004). 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, the market in which it is functioning, the
sources through which it is financed, and the way it utilizes its resources. Added to
these, 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. 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, reviewing of employee performance, security of assets, and segregation
of duties (Chambers (1995), Kakuru (1998), and Ishumgisa (2001)).
As stated by Kakuru (2001), conducting business involves multiple transactions
that affect financial performance of the firm. If internal controlsare not well implemented
DE LA SALLE LIPA
STUDENT RESEARCH
in the business, it will affect negatively the performance and productivity of the firm and
hence impede its capacity. Internal control assists managers to acquire the best
measures of the impact of different transactions geared towards generating a diversified
portfolio of investments, thus enhancing proper accountability. According to ACCA
(2004), assessment of risk involves the analysis and institution of plans in order to
prevent the risks associated with the attainment of company objectives. 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.
According to Lame & Tan (2000), the information and communication component
covers the understanding of policies and procedures, validation of information, and
evaluation of employee performance. In their perspective, monitoring is the most
prominent of all steps of ICSs. The majority of studies on monitoring and accountability
have suggested that fostering it will lead to higher performance.
Internal Control and Financial Accountability

According to Groth (2005) through the internal controls, the desired employees
performance and service delivery is achieved in accordance with the set internal control
objectives and as per guiding organizational policy. According to Magala (2001) and
James (2005,) 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. Cox (2000) stated that internal control leads to efficiency in
utilization of organization resources whereby; jobs are carried out as explained by their
description, availability of employees for work at all times, and equitable allocation of
resources and hence, timely service delivery. Anderson (2000) added that internal
control avoids employing idle staff in the organization thus ensuring constant provision of
services.
DE LA SALLE LIPA
STUDENT RESEARCH
Internal controls ensures; usage of funds on planned organizational activities,
investment of idle funds, and regular monitoring of utility (ACCA, 2004). 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, 1993). For any system to perform
effectively there must be a monitoring system (Boidman, 1993). Monitoring also shows
whether the system in place is performing effectively, as this can be seen from service
delivery. Bird (1992) suggested that to ensure compliance, administrators should put
spot clocks and frequent audits so that loss of revenue is minimized.
Financial Accountability and Service Delivery
The key to organizational survival, creating and maintaining wealth primarily lies
on accountability built into governance structures of corporations. According to Frost
(2000), there is a strong relationship between accountability and service delivery. In his
view, the aim of accountability is to improve performance but not to point fingers or put
the blame on someone and deliver punishment and hence, accountability improves
service delivery.
Carmen, 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.
Green (2003) refers to accountability as an organizations capacity to demonstrate,
answer or explain its actions. 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. They argued that
accountability increases the efficiency and effectiveness of an institutions and equally
leading to increased legitimacy and credibility of government.
According to Blinkerhoff, All health systems contain accountability relations of
different types which function with varying degrees of success and often, the perception
DE LA SALLE LIPA
STUDENT RESEARCH
of failed or inadequate accountability furnishes the motivation for reform. On applying
financial accountability to health service delivery, the accountability issues that emerge
can be assessed in terms of purposes of accountability namely; to control the misuse
and abuse of resources and authority, and to provide assurance that resources are used
and authority is exercised according to appropriate and legal procedures, professional
standards, and societal value.
Although accountability is viewed as a desirable organizational characteristic by
most writers, empirical studies indicate that both leaders and subordinates can avoid
accountability, according to Guixe, (2003) and Brown & Moose (2001). Whereas projects
are crucial in the overall success in any economy, in recent years in Uganda, project
failures have become a common practice due to poor accountability. However, empirical
research demonstrates that pressure for accountability from a multitude of external and
internal stakeholders is on an increase to cause adequate service delivery. 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. Under such situations, the
difference between management and owners gets thinner and the independency of nonexecutive directors becomes obscured (Rakodi, 2000). According to OConnell (2002),
improved accountability calls for poor people to increase their formal representation in
formal democratic system , influence resource allocation and working practices more
pro-poor and sensitive to gender and other social differences, monitor the performance
of those responsible for service delivery, hold politicians, officials and NGO service
providers accountable for their performance.
Review of Related Study

According to Ntongo (2012), there is a significant positive relationship between
internal controls and financial accountability which means that with effective internal
control, better financial accountability can be realized. From the study, that there was a
DE LA SALLE LIPA
STUDENT RESEARCH
significant positive relationship between internal controls and service delivery which
means that with effective internal control desired service delivery can be achieved.
Improvement in internal controls relatively improves service delivery. 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.
Alternatively, if there is no accountability, set goals cannot be achieved and service
provision will be inadequate.
It was also established from the study that the combination of internal controls
and financial accountability significantly predicted up to 38.8% of service delivery
(Adjusted R2=0.388, =0.000). This means that 61.2% of variations in service delivery
are predicted by other variables not considered in this study. However, it was indicated
that internal controls is the most significant predictor of service delivery as compared to
financial accountability. This confirms the findings by Bazzolil (2000) that internal control
ensures sound financial management which leads to the attainment of set goals. Thus,
the weak internal controls in the private health sector could not ensure sound financial
accountability and this hindered achievement of set goals and thus, service provision
was inadequate. (Ibid)
Literature Synthesis
The literature stated in this study conveys the internal control framework and its
elements. It also defines accountability and financial accountability and the current
Philippine health system. 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. With this study, 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.
DE LA SALLE LIPA
STUDENT RESEARCH
CHAPTER III
RESEARCH METHOD
This chapter tackles the research design and sampling design of the study. It will
also show in this chapter the methods of how the data are collected. 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.
Research Design
The study employed descriptive design to analyze the research problems and
objectives of the study. 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). Quantitative research, on the other hand, will be used
to present the mediating effect of financial accountability in relationship of internal control
to service delivery of HSIs.
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. The researchers focus is on the
ten health service institutions (HSIs) in the vicinity of Lipa City which are:
a. Lipa District Hospital
b. Fernando Air Base District Hospital
c. Ospital ng Lipa
DE LA SALLE LIPA
STUDENT RESEARCH
d.
e.
f.
g.
h.
i.
j.
N.L. Villa Memorial Medical Center

Divine Love General Hospital
Mary Mediatrix Medical Center
LipaMedix Medical Center
Metro Lipa Medical Center
San Antonio Medical Center
Lipa Doctors Hospital
The following health service institutions (HSIs) in Lipa City will be surveyed for
this research.
Locale of the Study
The research will take place in Lipa City, Batangas where the subject health
service institutions stated above are located.
Research Tool and Instrument
The primary data will be gathered from the answers to the survey questionnaire
adapted from the study Internal Controls, Financial Accountability and Service Delivery
in Private Health Providers of Kampala District of Ntongo (2012) that will be distributed
to the respondents. The survey is divided into four parts. The first part will be the profiling
of the respondents which are the representatives of accounting department of the
aforementioned health service institutions. The second part will be about the internal
control which will be subdivided into five subparts. These are control environment,
control activities, risk assessment, information and communication and monitoring and
evaluation. There are eleven (11) questions about control environment, thirteen (13) on
control activities, twelve (12) on assessment, thirteen (13) on information and
communication and eight (8) on monitoring and evaluation. The third part of the
questionnaire focuses mainly on financial accountability. It has fifteen (15) questions.
DE LA SALLE LIPA
STUDENT RESEARCH
Question number four (4) in this section was in negative statement because as adapted.
On the other hand, the last part will be questions about the service delivery of HSIs. It is
subdivided into two parts, namely: service satisfaction and service quality on which it has
twelve (12) and eleven (11) questions respectively.
Secondary data will be coming from the list of health service institutions provided
by Lipa City Health Office. Books, articles, blogs and journals will also be used as
secondary sources of data.
The five-point Likert scale will be used for the questions regarding internal
control, financial accountability and service delivery. It is a statement which the
respondents will show his or her level of agreement or disagreement. 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. 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.
2. The questionnaire will be given to the representatives of the accounting
department of each health service institutions in Lipa City.
3. It will then be consolidated to determine the respondents answers to the
research questions of the study.
DE LA SALLE LIPA
STUDENT RESEARCH
Data Analysis and Interpretation

Qualitative and quantitative analyses were employed in the study. These include
averages, frequency counts, simple mean and percentages.
To get the mean the researchers used the formula below:

X = x / N
Where:
X = mean
= summation symbol
X = population
X = population size
Table 3.1 Interpretation Table
Range
4.50-5.00
3.50-4.49
2.50 - 3.49
1.50 - 2.49
0.5 - 1.49
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, financial accountability and service
delivery. On the other hand, 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. The following table will be used to interpret the correlation
analysis:
Table 3.2 Pearson correlation analysis Interpretation Table
DE LA SALLE LIPA
STUDENT RESEARCH
Value
+.40 to +.69
+.30 to +.39
+.20 to +.29
+.01 to +.19
-.01 to -.19
-.20 to -.29
-.30 to -.39
-.40 to -.69
-.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, the table
above will also be used to interpret this effect.
REFERENCES
ACCA (2005). Managing people. London: Foulks Lynch.

Asia Pacific Observatory on Health Systems and Policies. (2011). The Philippine
Health System Review.
Brinkerhoff, (2003). Accountability and health systems: Overview, Framework, and
Strategies.
Carmen, M., Reiner, F., Janmejay, Singh. (2004). Social Accountability: An
introduction to the concept and emerging practice.
DE LA SALLE LIPA
STUDENT RESEARCH
Cox, A. (2000). Funding Agency Contribution to Education for all. London: Oxford
Publisher.
De Guzman, N. (2015, August 27). BusinessWorld | The Anatomy of Philippine
Health Care: recurring problems, challenges, and solutions.
Retrieved September 15, 2015, from
http://www.bworldonline.com/weekender/content.php?
id=114249#sthash.xZdNL1hS.dpuf
Delegation of the European Union of the Philippines, & Department of Health Republic of the Philippines. (2012). EU and the Philippines: Together
towards Universal Health Care.
Finn, N., & Kayande, T. (2006). Customer satisfaction cues to support market
segmentation and explain switching behavior. Journal of Business Research,
47(3).
Groth, M. (2005). (n.d.). Customers as good soldiers: Examining citizenship
behaviors in internet service deliveries. Vol.31, No.7. pp 5 - 34. Journal of
management, 31(7), 5-34.
Healthcare in the Philippines. (n.d.). Retrieved October 19, 2015, from
http://www.allianzworldwidecare.com/healthcare-in-the-philippines
Ireneo, J. M., Ireneo, S. C., & James, G. R. (2012). Auditing and Assurance
Principles. Manila: FC Arellano Publishing.
Kakuru, J. (1998). Basic Financial Management. Kampala: MUBS.
DE LA SALLE LIPA
STUDENT RESEARCH
Kayongo, P. (2004). Financial and Entrepreneurial among selected enterprises in

Kampala District, MU (Unpublished master's thesis).
Morehead, W. (2007). Internal Control and Governance in Non-Governmental
Associations Designed to Provide Accountability and Deter, Prevent and
Detect Fraud and Corruption (Doctoral dissertation). Retrieved from
ProQuest Dissertations and Theses database.
Ntongo, V. (2012). Internal Controls, Financial Accountability and Service Delivery in
Private Health Providers of Kampala District (Doctoral dissertation).
Retrieved from ProQuest Dissertations and Theses database.
Racaza, C. R., & Evangelista, R. D. (2011). Auditing Theory for students and
practice guide for auditors (4th ed.). Conanan Educational Supply.
Rossi, P. H. (1993). Evolution; A Symmetric Approach. Thousand Oaks, CA: Sage
Publications
DE LA SALLE LIPA
STUDENT RESEARCH
DE LA SALLE LIPA

Passed 102215

Încărcat de

Informații document

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Passed 102215

Încărcat de

Drepturi de autor:

Formate disponibile

STUDENT RESEARCH

A Proposed Research Paper

COSA, JOHN KENNETH ADAJAR

Statement of Research Problem

1.1 Conceptual Framework

1.2 Operational Framework

Significance of the Study..

Scope and Limitations .

REVIEW OF RELATED LITERATURE

Philippine Health System ...

2.1 Effect / Relationship / Influence / Association

2.2 Internal Control and Financial Accountability

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

2.4 Related Studies

2.5 Literature Synthesis

3.2 Respondents ..........

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

3.4 Research Tools and Instrument . .

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

3.6 Data Analysis and Interpretation ......

Pearson correlation analysis Interpretation Table....................

Background of the Study

Statement of the Research Problems

Statement of the Objectives

Significance of the Study

Scope and Limitations of the Study

Subject of the Study

Respondents of the Study

Operational Definition of Terms

Financial Accountability a concept that deals with the proper utilization,

Internal Control a process of lessening internal management issues, improving

Internal Control Framework

Monitoring and evaluation

Philippine Health System

Internal Control and Financial Accountability

Internal Control and Financial Accountability

Review of Related Study

Respondents of the Study

N.L. Villa Memorial Medical Center

Locale of the Study

Research Tool and Instrument

Data Gathering Procedure

Data Analysis and Interpretation

To get the mean the researchers used the formula below:

To determine the if there is a mediating effect of financial accountability in

ACCA (2005). Managing people. London: Foulks Lynch.

Kayongo, P. (2004). Financial and Entrepreneurial among selected enterprises in

S-ar putea să vă placă și