Cost Accountability in Higher Education

Cost Accountability in Higher Education

Anonymous. The Presidency. Washington: Spring 2009. Vol. 12, Iss. 2; pg. 10, 1 pgs

Abstract (Summary)

The report asserts that greater demand for student aid, tightening loan availability, dips in endowment assets and earnings, rising costs of debt payments, and deep state budget cuts all call for increased attention to spending, and a transition from merely cost accounting to cost accountability.

College and university students are paying higher tuition rates, but getting less in the classroom, according to a recent report from the Delta Cost Project, Trends in College Spending: Where Does the Money Come From? Where Does It Go? The report asserts that greater demand for student aid, tightening loan availability, dips in endowment assets and earnings, rising costs of debt payments, and deep state budget cuts all call for increased attention to spending, and a transition from merely cost accounting to cost accountability.

By examining state-by-state financial trends in higher education institutions' operating budgets, Trends offers a rare glimpse inside the black box of postsecondary education finance.

Key findings from the report include:

* Spending is increasing in some higher education institutions, but not in the places where the majority of students enroll. The fastest growth in enrollment has occurred in those institutions with the least resources and with the greatest evidence of actual spending cuts in the last few years-public community colleges.

* Aside from tuition revenues, the largest growth in revenues has been for research, public service, and auxiliary enterprises.

* The primary cause of tuition increases in public institutions is not increased spending, but rather cost shifting to replace losses in state appropriations and other revenues. In other public institutions, costs are declining even as prices are increasing. Private institutions are both raising tuition and increasing spending.

* The student share of costs is increasing relative to declines from institutional sources in all sectors except private research universities. Students who pay the full sticker price, on average, are paying very close to the full cost of their education.

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Cost Management

Cost Management

Justify Full
Maureen F Mascha. Issues in Accounting Education. Sarasota: Feb 2000. Vol. 15, Iss. 1; pg. 177, 2 pgs
DON R. HANSEN and MARYANNE M. MOWEN, Cost Management, Third Edition (Cincinnati, OH: South-Western College Publishing, 2000, pp. xxiii, 952).

The third edition of this text introduces beginning managerial accounting concepts, ranging from cost classification to more advanced activity-based costing techniques. It differs from previous editions in that its main focus is to separate discussion and coverage of functional or traditional cost accounting from that of activity-based accounting.

On the positive side, the authors provide broad, in-depth coverage of both traditional/functional and activity-based costing, including descriptions of newer, less covered cost concepts, such as activity resource usage and environmental cost management. They even include a separate chapter on the theory of constraints. In terms of topic presentation, the material is generally presented in a logical, sequential fashion, with continuity from initial concept introduction to problem application. Regarding end-of chapter material, the authors competently identify the concepts tested by each problem. In terms of visual presentation, the book is written in an organized fashion, using tables, exhibits, and numerical examples for emphasis-adding color contrast is added to help the reader focus on important material and to separate text topics/sections.

A major drawback of the text is the authors often making weak or little comparison between traditional/functional and activity-based costing methods. An uninformed reader might wonder how the two methods differ, and why, if activity-based costing is so relevant and important, we bother learning the traditional/functional method at all. A second drawback concerns an exception to the continuity trait noted under topic presentation. At issue is how the authors cover cost behavior. They introduce cost-behavior in Part I, but do not apply the concept to costvolume-profit, break-even, and relevant costing until Part IV. Thus, students do not apply cost-behavior concepts until much later in the book. Readers of the break-even and costvolume-profit (CVP) sections must refer back to Chapter 3 for a refresher on variable vs. fixed costs. Perhaps the authors should have moved their discussion of CVP and break-even to follow immediately the discussion on cost behavior. The final drawback is that the book is rather lengthy at 22 chapters, leaving the reader wondering if some discussions could be condensed or combined. For example, the chapter on theory of constraints could have been integrated into the other chapters, and the chapters on activity-based costing could have been combined. While the authors state that the book can be adopted for a one-semester course, most one-semester cost/managerial accounting classes would struggle to finish the entire text.

In summary, this book provides detailed coverage of managerial accounting topics, particularly of activity-based costing. However, it may be inappropriate for a beginning managerial accounting course without instructor modification. Some chapters should be moved so that coverage follows a sequential, logical path, while others should be better integrated or combined. The biggest drawback is that the instructor must "compare and contrast" traditional/functional cost accounting with activity-based cost accounting to explaining why to study both topics. Thus, this book may be inappropriate for instructors who have never taught managerial accounting before or are still new to the subject.

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