In Search of Contemporaneous Costing Practices in the Australian Not-Profit Sector
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This study examines how Australian non-profit entities determine the costs of their products and services, and investigates the determinants of this sector’s cost accounting practices. Data were collected via an online survey, three qualitative case studies, focus group discussion, and archival documents.
The evidence indicates that the vast majority of organisations surveyed used traditional cost systems (73.5%), with only 26.5 per cent using an activity-based costing method. Nearly 33 per cent used full costing, while 18.5 per cent used direct and variable costing, 10 per cent standard costing, 8.2 per cent job order costing, and the remaining 4 per cent direct costing.
Legislative requirements led non-profit organisations managers to use a greater number of data sources, to pursue a greater degree of integration with financial systems, and to employ a number of full-time employees to operate the integrated financial systems. Amidst intense competition for funding, non-profit organisations are more likely to use cost system data for executing budgets, determining user fees, satisfying legislative requirements, valuing inventory, and measuring performance.
The findings of this study will assist non-profit organisations around the globe in adopting contemporaneous costing approaches for strategic decision-making, as well as aid in refining existing processes and business models in order to adapt to changing social, economic and political environments. An enhanced knowledge of the current state of cost accounting practices in the Australian non-profit sector will also be beneficial to global professional accountants, including CIMA members and a range of stakeholders affected by investments, strategic decisions, and performance measurements.