MODUL 03

Module Overview

Module Title

• Modul 03: Akuntansi Manajemen dan Sistem Pengendalian Manajemen Sektor Publik

Author

• Daniel Nababan, S.E., M.Acc

Introduction

• Description: Understanding management accounting and management control systems in the public sector.

• General Instructional Objective: Students will understand management accounting and management control systems in the public sector after completing this module.

• Relevance: Explains the importance of management accounting and management control systems within the public sector.

Discussion on Management Accounting and Management Control Systems in the Public Sector

Management Accounting in the Public Sector

• Definition: A process involving identification, measurement, accumulation, analysis, preparation, interpretation, and communication of financial information used by management for planning, evaluation, and control, ensuring that resources are used appropriately and accountability is maintained.

Differences Between Management Accounting and Financial Accounting

Role of Management Accounting in the Public Sector

• Key Functions:

  • Strategic Planning

  • Cost Information Provision

  • Investment Assessment

  • Budgeting

  • Service Cost Determination and Tariff Setting

  • Performance Evaluation

• Activity-Based Costing Components:

  • Cost Finding: Accumulating costs to produce goods/services

  • Cost Recording: Recording data into the organization’s accounting system

  • Cost Analyzing: Analyzing costs, identifying types, behaviors, changes, and correlations with activity volumes

  • Strategic Cost Reduction: Reducing costs to achieve value for money

  • Cost Reporting: Providing complete cost information to management

Management Control Systems in the Public Sector

1. Management Control Process:

• Involves activities such as:

  • Planning

  • Coordination

  • Communication of information

  • Decision Making

  • Motivation

  • Control

  • Performance Evaluation

2. Management Control Structure:

• Related to the organization’s design and centers of responsibility.

Application of Management Accounting in the Public Sector

• Processes Involved:

  • Planning: Detailed formulation for achieving specific goals; includes goal setting and identifying methods.

  • Control: Monitoring plan execution with corrective actions as required.

  • Decision-Making: Selection processes among alternatives.

• Example: Government budgeting aligns costs with generated benefits through Performance-Based Budgeting (PPB).

Effective PPB

• Identifies the relationship between money value and outcomes, explaining how these connections occur, which is crucial for effective program management.

• Evaluates input resources and relationships with output/outcome for program effectiveness and efficiency.

Management Control System in the Public Sector

• Definition: Process to determine objectives for functionalities to serve public interests suitably.

• Objective: Ensure effective and efficient implementation across work units.

Types of Management Control in the Public Sector

• Preventive Control: Focused on strategic planning and program formulation.

• Operational Control: Related to monitoring program implementation per budget guidelines.

• Performance Control: Involves evaluating performance based on established benchmarks.

Structure of Management Control in the Public Sector

• Requires a well-supported organizational structure manifesting centers of responsibility.

Purpose of Responsibility Centers

• To provide planning, control, and performance evaluation.

• To facilitate goal congruence and delegation of tasks to competent individuals.

• To encourage creativity, strategy execution, and budget control.

Types of Responsibility Centers

1. Expense Center: Responsible for costs incurred without direct revenue input.

2. Revenue Center: Focused on revenue generation performance.

3. Profit Center: Evaluated on profit assumptions concerning costs and revenues.

4. Investment Center: Assesses performance based on profits and investments.

Budget Department Functions

• Establishes procedures for budget preparation and coordinates assumptions.

• Analyzes submitted budgets and performance for revisions if necessary.

Management Control Process in the Public Sector

Communication Channels

1. Formal Channels:

• Strategy formulation, planning, budgeting, operational assessment, performance evaluation.

2. Informal Channels:

• Direct communication, informal meetings, discussions that support organizational goals.

Goal Congruence Factors

• Formal Control Factors: Rules, systems, rewards, and punishments.

• Informal Control Factors: Work ethics, employee loyalty, and public service commitment.

Conclusion

• Effective management control systems in the public sector align the organization's objectives with personal goals, supported by a robust organizational structure and clear responsibility centers.

References

• Mardiasmo. 2005. Akuntansi Sektor Publik

• Bastian. 2006. Akuntansi Sektor Publik: Suatu Pengantar

• Hansen dan Mowen. 2009. Managerial Accounting

Closing

• Module 04 will discuss the conceptual framework of public sector accounting in Government Regulation No. 71 of 2010, outlining how it establishes Government Accounting Standards.