By Zach Mohr and Madison Esterle
One of the fundamental problems for local government public budget and finance research in the United States is the availability of audited financial data in a format that is easy to collect and analyze. This is a problem for both researchers that are trying to assemble large data sets and for practitioners that live in states that do not have centralized collection of this data. It is also a problem for cross state data collection, which is quite common for local jurisdictions that live on the borders of states. Undoubtedly, there is much duplication of effort and a great need for local government financial information that is comparable for research and practice.
In the 1990s there was a wave of euphoria about cost accounting and particularly Activity Based Costing (ABC). One book in particular stands out in my mind as particularly euphoric: Common Cents: The ABC Performance Breakthrough by Stephen Turney. While it had a clever title, few people remember this book now, but many people remember ABC. Many finance and budget managers do not recall ABC with fondness. In fact, when government budget and finance managers are asked about the use of ABC in their organizations now, most will say that they are not using it. However, when asked if they are doing some form of cost accounting, the measure is much higher. In this post, I explore why budget and finance managers are willing to say that they are doing cost accounting and not ABC. I further explore (and mix) the metaphor of common sense/cents about cost accounting by thinking of its uses as two sides of the same coin.