Management accounting in public administration
The costs of public institutions and administrations are constantly rising, whether due to inflation, higher staffing levels, more services, new legal requirements or political decisions. These tasks are usually financed by tax contributions, user fees of all kinds or financial contributions from other sources.
As a result, the administrative and management areas of municipalities, cities, districts or countries are increasingly occupied with the cost-effective management of their own operations and facilities. With financial accounting, only rudimentary evaluations per cost center can be delivered. To individual products and services there is no reference if there is no decision relevant management accounting.
Some examples of affected organizational units:
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- Kindergardens, elementary school, secondary schools through to universities, vocational training and further education and training for professionals
- Leisure facilities and public swimming pools
- Water supply and wastewater
- Energy supply
- Waste disposal
- Local police and fire departments, local public transport organizations
- Maintenance of roads, squares, parks, cemeteries
- Retirement and nursing homes, medical services
- Tax offices
- Information and advisory organizations for citizens.
Managers, politicians and citizens want to know how much the products and services cost per unit, what costs are to be borne by each administrative area and how the costs per service unit change over time.
This presupposes that the products and services of public administration units are defined and that work plans and – where applicable – bilss of material are drawn up for each product. Similar to industrial companies, management accounting systems must therefore be set up which can calculate planned, target and actual costs per cost center and product or service.
The book “Kosten-Leistungsrechnung für die Verwaltung” (Management accounting for public administration) shows with various examples how management accounting can be realized in public administrations in plan and actual. Together with the Office for Municipalities of the Canton of Zurich (Switzerland), the product catalog of a smaller city was developed. This catalogue is included in the aforementioned book and serves as a template for structuring and calculating cost centers, products and services (incl. CD with integrated numerical model).