Comparing Cost Accounting Use across European Countries

Cost accounting is a very old system and practice in government financial management. In spite of its age and undisputed place in the firmament of government finance, relatively little research has been conducted on its use... [ view full abstract ]

Cost accounting is a very old system and practice in government financial management. In spite of its age and undisputed place in the firmament of government finance, relatively little research has been conducted on its use until recently (da Costa Carvalho, Gomes, & José Fernandes 2012; da Costa & da Costa Carvalho 2007; Doyle, Duffy, & McCahey 2008; Flury and Schedler 2007; Gomes, Fernandes, & da Costa Carvalho 2015; Mohr 2016; ter Bogt 2008). This paper looks to expand knowledge about cost accounting by taking a comparative approach to assess the factors that influence the use of cost accounting in European countries.
Three frameworks are examined to explain the use of cost accounting. The first framework is the New Public Management (NPM) framework (Hood 1995; Hood & Peters, 2004). Cost accounting is related to NPM in this framework because it is supposed to increase efficiency and effectiveness. Raudla and Douglas (forthcoming) drew a “cost accounting map” using the NPM framework and correlated cost accounting with other NPM instruments. The second framework looks at the administrative traditions of different regions of Europe as an important predictor of the use of cost accounting. The third framework is the accountability framework that argues that recent use of cost accounting may be driven by fiscal stress and the need to respond to financial pressures. Even if the use of cost accounting cannot alleviate all the problems experienced in a country, the use and development of cost accounting, possibly in conjunction with other reforms like performance budgeting or responsibility accounting, can be offered as a potential strategy
To examine these three frameworks, we will analyse the question in the survey collected by the Coordinating for Cohesion in the Public Sector of the Future (COCOPS). This survey sampled over 25,000 public sector managers in 19 countries. In total, 5,860 managers answered the question about the use of cost accounting, which makes this a very large sample. The sample is sufficient to analyze the three frameworks and draw conclusions about the use of cost accounting in a comparative context. The analysis sheds light on whether cost accounting and instruments like it are influenced more by historical, geographic, or strategic contexts.