Cost Accounting Trends in the Public Sector

The cost accounting allows to implement an information system dedicated to the internal monitoring that offers to the management the possibility to perform a wide variety of investigations and inspections, in order to verify the accomplishment of different objectives. An organization can assist its decision-making process with pertinent cost information about goods and services from the Cost Accounting System. Traditionally, an organization's cost accounting system was created to assist in determining a fair price for goods and services sold as well as to fulfill the requirements of financial (external) reporting. When traditional methodology has been developed, direct labor and materials were the most significant product or service costs, with overhead costs that engraved only with a small percentage of total costs. In the recent context of the public administration corporatization and of the outsourcing processes for the public services delivery, the awareness that the resources are becoming increasingly scarce and, therefore, that it is necessary to use them in a cost-efficient way in order to achieve high standards, plays a pivotal role. Regarding the implementation phase of a cost accounting system, a great awareness of the existing organizational structure of the enterprise and of the activities, is necessary to have. This is in order to collect information about the various responsibility centres to which assign the costs. Therefore, with reference to the public service sector, the ABC verifies, for each service, the acquired financial resources, the costs of each productive factor, the obtained qualitative and quantitative results, and the revenues. The activity-based costing, applied in public services, is a full costing method which recognizes the relationship between costs, activities, and products/services of a public administration. The ABC has the function to support the decision-making process and to inform the management about the resources acquisition and the level of resources utilization.