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Managerial Cost Accounting
-Identifying the Specific Costs for Each Program
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In order to meet the requirements of both the Government Performance
and Results Act (GPRA), which mandated performance measurement and set the
stage for performance budgeting for Federal agencies, and the
Statement of Federal Financial Accounting Standards No. 4 (SFFAS No. 4)
Managerial Cost Accounting Standards
, which required Federal agencies to provide the full costs of their programs, the Department must
now develop the capacity to identify the specific costs for each of its
programs.
OMB Bulletin 97-01
Form and Content of Agency Financial Statements
, requires preparation of a "Statement of Net Cost", which
includes the full costs of responsibility segments. In FY 1998 the DOL
consolidated financial statements included the Statement of Net Cost for
the first time. The notes to the Statement of Net Cost provided cost and
revenue information
by Agency
for five crosscutting programs in the
Department. The FY 1999 financial statements further allocated costs into
the Department’s eleven outcome goals.
However, to become a useful tool to support managing for results, performance budgeting, and
identifying cost inefficiencies, specific cost information needs to be
provided for each program in conjunction with that program’s results.
Joint OIG - MSHA Pilot to Develop a Cost-Based Program Results Statement
During FY 1999,the OIG and the Mine Safety and Health Administration
(MSHA) began a joint effort to develop a
Cost-Based Program Results Statement
that would attach the actual costs to each program's
results. This pilot project was similar to efforts being conducted by the
Department with the Veterans Employment and Training Service (VETS) and
the Occupational Safety and Health Administration (OSHA). These pilot
projects represent the first steps the OIG and the Department are making
toward implementing
managerial cost accounting
at the agency and program levels. However, work on these pilot projects has uncovered
several obstacles to rapid progress.
Obstacles Identified in Initial Efforts to Link Costs to Results
Paramount among the obstacles to implementing cost accounting
identified thus far during the MSHA pilot is the lack of information
systems that capture and report full costs at the program activity level.
In addition, other obstacles have been encountered in attempting to
determine the following:
OIG Concerns With DOL's Efforts to Develop Cost Accounting
The Department is making an effort to develop a cost accounting system
that will eventually accumulate the specific costs for each program and
link these costs to the program's results. The Department intends to
implement this process within each agency by the end of FY 2001. However,
to date, only two agencies have voluntarily agreed to work with the
Department to implement a cost accounting process. A third agency, MSHA,
is considering whether to work with the Department at this time.
The Department's remaining agencies, including the two largest, ETA and ESA,
are neither working with the Department nor have current plans to work
with the Department to implement cost accounting. To achieve the full
benefits of managerial cost accounting the Department must reach an accord
with these agencies.
Even with the best of efforts, the Department
is a few years away from linking specific costs with each program's
results.
Currently, costs are being allocated to DOL outcome goals at year-end
only, based on percentages as determined by the agencies.
Cost information must be provided at the program level on a regular and
consistent basis throughout the year to enable cost accounting to support
program management decisions. This will require a methodology to
continually assess and update allocation procedures at the program
level.
Benefits of Linking Program Costs to Results
To meet GPRA reporting and budgetary submission
requirements, costs must be linked to program activities and agency or
program specific performance measures and strategic goals. By linking
costs to results, the Department and Congress can assess the value of past
expenditures and chart the future direction of Federal programs based on
reported results and their costs. This new level of informed oversight
will finally provide the type of accountability demanded by the public and
allow a more reasoned guidance of Federal efforts.
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New Requirements Mandate Managerial Cost Accounting
Report No. 12-00-010-06-001, (September 28, 2000)
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