Transparent Costing: Has the emperor got clothes?

Abstract Transparent Costing (TC) is a framework for determining the full indirect costs and thereby the full costs (FC) of Australian Competitive Grant (ACG) research projects; with the objective of ensuring the full funding of these projects by the government, so that they could be sustained in the long-run, and preventing their cross-subsidisation from other revenue sources. If a university wishes to be fully funded for its AGC research projects, it is mandatory to undertake a TC exercise and allocate the indirect costs of research activities. It was found in this study that whilst the objectives of FC appear worthwhile, FC may not prevent the practice of cross subsidisation. Also whilst it was found that Time-Driven Activity-Based Costing (TDABC) is preferable to ABC in the TC modelling of ‘research only’ departments and institutes; both approaches do not provide accurate information in ‘teaching and research’ departments. In these departments more accurate estimations could be obtained from studying the workload allocation methods and conducting direct interviews of the staff undertaking research on ACG and other externally funded grants.

[1]  J. Eldridge,et al.  Beyond Contract: Work, Power and Trust Relations , 1975 .

[2]  Shannon W. Anderson,et al.  A Framework for assessing cost management system changes : the case of activity based costing implementation at General Motors, 1986-1993 , 1995 .

[3]  R. Kaplan,et al.  Time-driven activity-based costing. , 2003, Harvard business review.

[4]  Andrew Pettigrew,et al.  The New Public Management in Action , 1996 .

[5]  Christopher Pollitt,et al.  Managerialism and the Public Services: Cuts or Cultural Change in the 1990S? , 1993 .

[6]  William J. Cotton,et al.  Note on a New Zealand replication of the Innes et al. UK activity-based costing survey , 2003 .

[7]  Robert S. Kaplan,et al.  The innovation of time-driven activity-based costing , 2007 .

[8]  Alexandra Van den Abbeele,et al.  Time-Driven Activity-Based Costing for Inter-Library Services: A Case Study in a University , 2007 .

[9]  C. Hood.  PUBLIC ADMINISTRATION AND PUBLIC POLICY: INTELLECTUAL CHALLENGES FOR THE 1990s1 , 1989 .

[10]  Efrosini Kaimenaki,et al.  ABC: adopters, supporters, deniers and unawares , 2005 .

[11]  Maurice Gosselin.  The effect of strategy and organizational structure on the adoption and implementation of activity-based costing , 1997 .

[12]  Kip R. Krumwiede.  The Implementation Steps of Activity-Based Costing and the Impact of Contextual and Organizational Factors , 1998 .

[13]  J. Ratnatunga,et al.  Teaching note: Traditional and activity based costing systems , 1997 .

[14]  Thomas H. Johnson,et al.  Relevance Lost: The Rise and Fall of Management Accounting , 1987 .

[15]  S. Byrne,et al.  Is ABC Adoption a Success in Australia , 2009 .

[16]  Eva Labro,et al.  On the Determinants of Measurement Error in Time-Driven Costing , 2008 .

[17]  Iqbal Khadaroo,et al.  Accountability and value for money: a theoretical framework for the relationship in public–private partnerships , 2011 .

[18]  Christopher M. Wright.  The Management of Labour: A History of Australian Employers , 1996 .

[19]  A. Barton.  How to Profit from Defence: A Study in the Misapplication of Business Accounting to the Public Sector in Australia , 2004 .

[20]  I. Demirag,et al.  Accountability and Value for Money in Private Finance Initiative Contracts , 2008 .

[21]  R. Kaplan,et al.  Measure Costs Right: Make the Right Decisions , 1988 .

[22]  Pierre Lascoumes,et al.  Introduction: Understanding Public Policy through Its Instruments—From the Nature of Instruments to the Sociology of Public Policy Instrumentation , 2007 .

[23]  J. Saebel,et al.  Update on National University Stress Study , 2008 .

[24]  C. Hood,et al.  Intellectual Obsolescence and Intellectual Makeovers: Reflections on the Tools of Government after Two Decades , 2007 .

[25]  Anona Armstrong.  A Comparative Analysis: New Public Management — The Way Ahead? , 1998 .

[26]  Charles T. Horngren.  Management Accounting: Some Comments , 2004 .

[27]  William A. Robson,et al.  THE PUBLIC SERVICE , 1936 .

[28]  Werner Bruggeman,et al.  Time-driven activity-based costing: exploring the underlying model , 2007 .

[29]  Michael D. Shields,et al.  Handbook of management accounting research , 2007 .

[30]  Werner Bruggeman,et al.  Towards explaining cost estimation errors in time equation-based costing , 2007 .

[31]  Kevin Baird,et al.  Adoption of activity management practices: a note on the extent of adoption and the influence of organizational and cultural factors , 2004 .

[32]  Geoffrey B. Sprinkle.  Perspectives on experimental research in managerial accounting , 2003 .

[33]  Universite’LavaE.  THE EFFECT OF STRATEGY AND ORGANIZATIONAL STRUCTURE ON THE ADOPTION AND IMPLEMENTATION OF ACTIVITY-BASED COSTING * , 2003 .

[34]  Public Service , 1966, Nature.

[35]  Shannon W. Anderson,et al.  Managing Costs and Cost Structure Throughout the Value Chain: Research on Strategic Cost Management , 2005 .

[36]  Teemu Malmi,et al.  Towards explaining activity-based costing failure: accounting and control in a decentralized organization , 1997 .