Federal Costing

 
 

Generating New Cost Management Insights

In the government world, financial managers are concerned about budget.  While operational teams and resource managers focus on how to utilize the budget in the best possible way.  Alta Via reconciles these different views sourcing from the same consistent data set to provide feedback on budget requirements and requests.View our article on Gov CIO 

Improving Federal Costing for Better Decisions

Specific federal costing issues are addressed and outlined in Improving Federal Costing for Better Decisions by the IMA’s Strategic Cost Management Task Force.

This 30-page report is intended to help agency financial and operational executives and managers, the Office of Management and Budget (OMB), and congressional appropriations and authorization committees understand the nature of the deficiencies in the cost information they are currently using, understand how it impairs effective decision making, and provide the language and framework for creating the knowledge, guidance, and processes to produce effective cost information for internal decision making

The four key issues and recommendations discussed in the report include:

  • Why the official and audited report of cost data (Statement of Net Cost – SNC/SONC) cannot be used for decision making, budgeting, program management, or planning of adequate change management
  • Exploring federal systems, its ‘full cost’ doctrine, and orientation towards reporting compliance rather than decision optimization
  • How federal cost methods and their systems focus more on compliance and expenditure control rather than leveraging quantities and resource capacity
  • Examining the impact of federal costing systems that serve budget and expenditure-centric processes, are primarily backward-looking, and do not prioritize or accurately reflect resources, processes, and causal relationships used for planning or projection of forward-looking cost

A Critical Gap in Managerial Accounting

The most critical gap found in both the public and private sectors stemmed from no definitive guidance on costing for internal management decision making.  It may surprise many federal executives and managers to learn that this gap exists in the costing community and that finance professionals who need or want to develop their costing information would greatly benefit from understanding Management Accounting Principles and to fully comprehend the risks if ignored.