Developing Accurate Costing Systems
Christopher S. Chapman
University of Bristol
Imperial College London
August 15, 2011
AAA 2012 Management Accounting Section (MAS) Meeting Paper
Developing accurate cost systems is not only a technical, but also an organizational challenge, as it requires taking into account the knowledge of non-accountants. However we know very little about this process of how cost systems are made more accurate in practice. This study, reporting the results from a field study undertaken in a UK Hospital, makes two main contributions: Firstly, we suggest that reducing the total error through trade-off or off-setting effects misses an essential point, even if it may reduce the total error. Errors are not only sources to improve accurateness of costs but also play a positive role in the management of efficiency. Secondly, we find that there is a recursive process of making cost systems more accurate. We identify that this process is on-going without necessarily converging on an optimal end-state of error level. This understanding has significant implications for designers and users of costing systems.
Number of Pages in PDF File: 25
Keywords: costs system design, errors, process
Date posted: August 15, 2011
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