POSSIBILITIES OF THE APPLICATION OF ACCOUNTING OF COSTS BY ACTIVITIES IN THE PUBLIC SECTORMirsad Bešlagić Teodor Petrović |
Published 10/31/2018 |
ABSTRACT
The business environment has become more dynamic and unpredictable nowadays. It is characterized by a progressive reduction in labor and material costs and intensive use of technology, and with this shifting, general costs become a significant part of total costs. The allocation of general costs to products and services, if incompatible with the causality principle, can lead to incorrect information that is not effective and does not reflect the use of the organization's resources. In today's environment, traditional cost accounting systems do not provide accurate cost information, while cost-based activities (ABCs) can provide a more efficient management system. ABC is not only an improvement in the conventional approach but also a radically different approach to cost accounting, a methodology that provides information for the organization's ongoing progress, a cost-effective, cost-effective system for processes, products and customers. The paper discusses the beginning, the essence and the possibility of applying cost accounting by public sector activities, where the needs for relevant cost information are continuously increasing. Application data is taken from the organization's documentation, financial records, time estimates for individual activities, direct observation and informal interviews with employees. The results show that ABC can be applied in the public sector and obtain precise information by converting accounting data into costing activities that relate to the quality of products, services and the welfare of citizens. The ultimate objective of the application approach is not only to calculate the "right" price of services but to demonstrate the usefulness of ABC when overall costs increase in total costs and when a range of services grows, such as in the public administration and non-profit organizations. In addition to the advantages ABC approach has limitations, including the complexity of application that is higher in the public than in the private sector.
Keywords: costing by activity, public sector, HOV Commission.