Cost Accounting High on the Agenda of the SEE Countries

Countries across the SEE region are starting to realize the importance of understanding the meaning of ‘cost’. Cost is much more than a budgetary allocation or a purchase cost. Different costs have different characteristics in different circumstances and in order to make sensible decisions (e.g. about new services, activities or investments, charges for services or outsourcing) costs need to be analyzed in a way which reflects those characteristics. Furthermore, countries strive to better allocate resources and to review how efficiently and effectively they are used. To do that successfully, a better understanding of the cost of a service or activity is essential.

The CEF recently delivered a regional workshop on cost accounting that was jointly delivered by Noel Hepworth and Gary Gilbert, both public financial management professionals, to discuss the dilemmas and challenges related to the introduction of costing systems and to practice various costing techniques.

One participant from the Ministry of Finance of Turkey explained why cost accounting is important within the public financial management system. She said, “Within the scope of the public financial management and control system, cost accounting is an important tool in the decision making process. It improves budget decisions by strengthening the linkage between the resources and outputs/outcomes of the institutions. Thus, it contributes to the efforts of countries to improve accountability in the public sector.” Other participants confirmed the growing importance of cost accounting.

The cost accounting workshop was timely as the SEE countries currently do not use cost accounting systems but are considering how to introduce them. However, this is a process that requires efforts from many actors, especially on the management side, as managers need to undertake a much more detailed analysis of costs than is done presently. The workshop participants agreed that the first and the most important step would be developing a cost-conscious culture.

The workshop was held on April 28–30, 2015. For key takeaways from this event, please visit our digital story.