Temporal Anomalies in Budgetary Cost Control of Municipal Corporations

Konferenzbeitrag

The last financial crisis revealed anomalies in corporate ability to face adverse economic conditions and fast exchange of new developments. Relying mostly on accounting data for budgetary cost control, the Management found that the data, although fiscally correct and valid for strategic assessment and outside reporting, was too old for tactical business decisions. Budget costs are traditionally tracked through End of Month report. But, the data that is fed into accounting is of different age. There is no consistent synchronized set of data, at any single point in time that could be used with confidence. When the synchronization is finally reached, the data is a post mortem analysis of a past point in time which cannot help in establishing current cost position. This is in particular true in a holding company with multiple subsidiaries where results are reported with arbitrary lags that are favorable to a particular business unit. This paper analyses time lag of accounting data in a large municipal holding subsidiary over the period of 10 years. The results show that in the last five years, almost half of the financial End of Month Reports failed to include between 30% and 78% of the costs for a particular month. The paper further proposes a model of an information system, that touches both inside and outside the accounting, enabling run time current data reporting. An early warning system, oblivious of subsidiary or departmental boundaries, detects the breach of set tolerances and alerts immediately selected professionals of new developments, increasing corporate accountability at all altitudes.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: In: 7th International OFEL Conference on Governance, Management and Entrepreneurship: Embracing Diversity in Organisations. April 5th - 6th, 2019, Dubrovnik, Croatia ; Year: 2019 ; Pages: 27-40 ; Ed(s).: Tipurić, Darko ; Hruška, Domagoj ; Zagreb: Governance Research and Development Centre (CIRU)

Classification and Topics

• Classification: Management
• Subject: Budgeting ; Cost control ; Information system

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bačun, Dinko
• Event: Veröffentlichung
• (who): Governance Research and Development Centre (CIRU)
• (where): Zagreb
• (when): 2019

Further information

• Handle: http://hdl.handle.net/10419/196071
• Last update: 10.03.2025, 11:43 AM CET