THE INFLUENCE OF FUNDING SOURCE AND LEGISLATIVE REQUIREMENTS ON GOVERNMENT COST ACCOUNTING PRACTICES

This paper provides preliminary evidence on the determinants of cost a ccounting practices in government agencies. Drawing on institutional a nd contingency theories of management accounting choice, we examine tw o potential influences on the design and use of government cost system s. legal requirements to be self-funding and mandated requirements for cost accounting data. We test these hypotheses using survey data from the U.S. General Accounting Office. The empirical evidence indicates that organizations using cost system output to satisfy external requir ements tend to implement more ''elaborate'' cost accounting systems th an units without external requirements, but are no more likely to use cost system data for internal purposes. in contrast, government organi zations that are required to ''pay their own way'' by fully recovering costs through revenues or fees not only implement more elaborate syst ems than units funded by appropriated budgets or reimbursement of expe nses by other government units, but also tend to make more extensive u se of cost system output for a wide variety of internal purposes rangi ng from pricing to management control. Copyright (C) 1996 Elsevier Sci ence Ltd