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Activity-Based Costing in Public Administrations: A Business Process Modeling Approach

Activity-Based Costing in Public Administrations: A Business Process Modeling Approach
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Author(s): Jörg Becker (European Research Center for Information Systems, Germany), Philipp Bergener (European Research Center for Information Systems, Germany) and Michael Räckers (European Research Center for Information Systems, Germany)
Copyright: 2012
Pages: 11
Source title: Innovative Mobile Platform Developments for Electronic Services Design and Delivery
Source Author(s)/Editor(s): Ada Scupola (Roskilde University, Denmark)
DOI: 10.4018/978-1-4666-1568-7.ch011

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Abstract

The traditional way of budgeting in public administrations is input-oriented; however, this system does not meet actual methods of efficient budget controlling as a mapping of output parameters. Due to challenges, such as the need for cost reduction because of decreasing tax revenues, pressure for controlling mechanisms is rising. Furthermore, Europe Pan-European directives foster process harmonization and introduction of IT-supported and optimized business processes in the public sector. In this regard, activity-based costing can be a useful instrument for efficiency measurement of public administrations output. Through the introduction of new public management and double-entry accounting public administrations, the opportunity to use cost-centered accounting mechanisms to assess process performance while evaluating their activities in a holistic concept is accomplished. Process modeling can be a useful instrument to help public administrations to capture relevant process knowledge and thus create the data basis for activity-based costing.

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