Comparing Cost Accounting Use across European Countries: The Role of Administrative Traditions, NPM Instruments, and Fiscal Stress

• Published date: 01 March 2021
• Author: Zachary T. Mohr,Ringa Raudla,James W. Douglas
• Date: 01 March 2021
• DOI: http://doi.org/10.1111/puar.13162

Cost Accounting Use across European Countries 299

Public Administration Review,

Vol. 81, Iss. 2, pp. 299–307. © 2020 by

The American Society for Public Administration.

DOI: 10.1111/puar.13162.

Zachary T. Mohr

Comparing Cost Accounting Use across European Countries:

The Role of Administrative Traditions, NPM Instruments,

and Fiscal Stress

Abstract: Cost accounting in public organizations is not often studied from a comparative perspective, particularly

at the national level of government. While it is often claimed that factors such as New Public Management (NPM)

and fiscal stress are the primary drivers of government cost accounting, an important but understudied factor is the

administrative tradition of the government, which may influence the use of cost accounting and tools like it. This

article examines the perceptions of top public executives regarding cost accounting use across 19 European countries.

It focuses on three key factors identified in the literature as potentially being associated with cost accounting use—

administrative traditions, NPM instruments, and fiscal stress. Findings show that administrative tradition and the

use of NPM instruments are related to cost accounting use, but fiscal stress is not related to cost accounting use in the

countries in our study.

Evidence for Practice

• The different administrative traditions of Europe may either promote or discourage the use of strong

managerial tools like cost accounting.

• Cost accounting can be used with New Public Management (NPM) reforms such as performance

information and decentralization. However, any administrative reform or innovation should fit within the

existing culture of the organization and administrative tradition.

• Some regions have strong administrative traditions that promote cost accounting, but NPM may have

influenced some regions’ administrative traditions to be more accepting of cost accounting and other NPM

reforms.

• Cost accounting in government is often promoted because of fiscal stress, but this analysis shows that

short-term fiscal stress is not associated with greater use of cost accounting. Cost accounting takes resources

and time to develop, which does not make it a fix for short-term fiscal stress. However, according to the

literature, it has many beneficial uses that may reduce fiscal stress over the long term.

Cost accounting entails the systems and

practices used by organizations to determine

the total organizational cost of providing a

good or service (Mohr 2017). It can help financial

managers make more accurate decisions about product

costing, contracts, performance, and cost management

(Mohr 2015, 2017). In spite of cost accounting’s

age (Jones 1989; Rivenbark 2005) and undisputed

place in the firmament of financial management,

relatively little research has been conducted on its

use in public administration contexts until recently

(Carvalho, Gomes, and José Fernandes 2012; Doyle,

Duffy, and McCahey 2008; Flury and Schedler 2006;

Mohr 2019; Salgueiro and Carvalho 2007; ter Bogt

2008). This article looks to expand knowledge about

government cost accounting by taking a comparative

approach to assess the factors that influence the use

of cost accounting in the central governments of

Europe.1

Research in the field of public administration has

tended to focus on practices in single-country

contexts, primarily at the local government level

(e.g.,Salgueiro and Carvalho 2007; ter Bogt

2008). While there is a literature from the field of

management accounting on government costing, there

is almost no work that takes a comparative perspective

across countries (for an exception, see Lapsley and

Pallot 2000, which was conducted at the local level).

Despite calls for more comparative work on cost

accounting in the literature (Hopwood 1999; Lapsley

and Pallot 2000), only recently has research been

done across multiple countries (Mohr, Raudla, and

Douglas 2018; Raudla and Douglas 2016), and there

is no research that we are aware of that empirically

studies how macro-level conditions such as fiscal stress

and administrative traditions influence government

cost accounting practices in multiple countries. In

this article, we take a comparative approach and look

University of North Carolina at Charlotte

Tallinn University of Technology

Ringa Raudla

James W. Douglas

University of North Carolina at Charlotte

James W. Douglas is professor in the

Department of Political Science and Public

Administration at the University of North

Carolina at Charlotte. His research interests

include public budgeting and finance,

comparative administration, and judicial

administration. His research has appeared

in journals such as

Public Budgeting &

Finance, Public Administration Review,

Policy Studies Journal, Journal of Policy

Analysis and Management, American

Review of Public Administration

, and

American Journal of Political Science

.

Email: jwdougla@uncc.edu

Ringa Raudla is professor of fiscal

governance in the Ragnar Nurkse

Department of Innovation and Governance,

Tallinn University of Technology, Estonia.

Her main research interests are fiscal policy,

public budgeting, and public administration

reform. She has published widely in the

leading journals of public administration.

She has also worked as a consultant for

various government organizations. She is an

editorial board member of seven journals

in the fields of public administration, public

management, governance, and economics.

Email: ringa.raudla@taltech.ee

Zachary Mohr is assistant professor

in the Department of Political Science and

Public Administration at the University

of North Carolina (UNC) at Charlotte.

His research interests are related to

cost accounting, budgeting, and control

in government. He has published cost

accounting research in leading academic

journals and published the edited book

Cost Accounting in Government: Theory

and Applications

(Routledge, 2017). He

is also interested in behavioral public

administration and is director of the POLS-

Lab at UNC Charlotte.

Email: zmohr@uncc.edu

Research Article:

Global PA

Symposium