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4. Can financial statement user of non-for-profit hospitals financial statements expect to be fully informed regarding affiliated parties, such as linkages between St. Jude Children's Research Hospital, ALSAC, and the foundation cited? Explain.

from: Charitable Contributions and Debt: A Comparison of St. Jude Children's Research Hospital/ALSAC and Universal Health Services.

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Solution Summary

Your tutorial is 244 words and explains how different the motivation for related parties transactions changes the need for level of disclosure in financial statement. It also explains how the lack of arms length nature in related parties is more of a threat in for-profit firms.

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Readers of not-for-profit hospitals will be informed about related parties but not as extensively as in a for-profit organization. Why? Typically the reader of the not-for-profit hospitals are not as interested in related party information as readers of the for-profit counterparts and so the details about related parties are not as extensive. In a for-profit firm, a related party may trade with the firm at less than market prices or more than ...

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  • MSc, University of Virginia
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