Ivana Dražić Lutilsky

Cost Allocation Accounting Methods Used in the Croatian Production Sector

Cost Allocation Accounting Methods Used in the Croatian Production Sector Before conducting the research, two main hypotheses were proposed: H1: The majority of Croatian production companies use traditional accounting methods for cost allocation. H2: Direct production costs make up the largest portion within the production cost structure for the majority of Croatian production companies. Because of this production cost structure, modern cost allocation accounting methods would not contribute to more reliable company profitability evaluation and business decision-making. The research is based on a specific sample including every important Croatian public production company. The process of cost allocation process is not easy. It is a difficult and complicated procedure that requires the application of appropriate accounting methods. The process of allocating costs to cost objects is realized through the application of certain accounting methods. These accounting methods often cannot provide fair and objective cost allocation because they have arbitrary bases that are not always appropriate.

Performance Measurement as the Basis for Hospitals Strategic Management

Hospitals are institutions of very high degree of complexity and they absorb significant budgetary resources. Effective management is very important for hospitals and for society as a whole. In conditions of limited financial resources, management of hospitals is extremely complex and demanding, and requires the use of high quality and timely management information. Authors analyze what information managers of public hospitals need for successful, balanced management. The aim is to explore issues of performance measurement as a basis for strategic business management of Croatian hospitals. Hospitals are under pressure to provide high quality services, while in the same time, they need to reduce costs, improve performance and increase customer satisfaction. Information on costs, prices and service fees, program goals, methods of measuring programs’ performance, financial and non-financial performance indicators are therefore extremely important for strategic business management of hospitals. This paper analyzes the ways of measuring hospital’s performance, the selection and definition of adequate performance indicators, and models of performance reports as a basis for business decisions making and the presentation of performance. Based on the analysis we propose performance report for one hospital in Croatia, a methodology of drafting the report as well as its use in decision-making process.

Financial Services in the VAT System in the European Union and Croatia

This paper presents differences in the VAT treatment of financial services. We investigated the treatment of financial services in the VAT system in EU countries as well as in Croatia, in order to reveal differences and improvement possibilities. The results show that there is a need for significant improvement in the VAT system, especially in Croatia. Furthermore, European Union countries have applied tax regulations since 1977. The research on the VAT treatment of financial services indicates that there is unequal application of tax exemptions and adverse tax competition in EU countries. Nevertheless, Croatia is still adjusting its legislation (the tax treatment of financial services) with EU provisions. Our paper thus provides a comparative analysis of the treatment of financial services in the VAT system in EU and Croatia that could be useful for the new consideration of the financial services position in the VAT system in Croatia.

Cost Planning and Controlin Croatian Public Sector

Abstract To examine the state of managerial accounting use in Croatian public sector, the survey based on the questionnaire made was conducted in 2006 and 2011. The questionnaire was sent to 150 organizations and units in public sector and it consisted of 24 questions. The total of 123 units responded to the questionnaire in 2006, while 88 public sector units and organizations returned the answered questionnaire in 2011. In this paper the authors present empirical results of the research conducted. The results prove that cost management for purposes of cost planning and control in Croatian public sector is still undeveloped and still not sufficiently used in the process of determining budgetary spending. Also, the authors provide possible solutions for better usage of managerial accounting in Croatian public sector.

Accounting System in Croatian Public Health-Care Sector: Current State and Improvement Perspectives

As in many countries, public health-care sector represents a very important subsystem of Croatian general government sector and a very important segment of total public spending. The specificities of Croatian public health-care sector refer to its financing model and asset structure, but mostly to large material and human resources, employment needs and service delivery model/set of procedure complexity. From a health-care financial management macroeconomic point of view, hospitals’ spending represents the most demanding and the most expensive segment, while cost-efficiency and effectiveness of hospitals reflect the overall health-care system quality. This implies management efficiency and effectiveness that further require necessary quality, accuracy and complete set of both financial information (which would reflect true and fair view of organization’s financial position and performance) and nonfinancial information (which would further indicate the effectiveness level). In addition, Croatian public health system has been a subject to frequent reforms and almost permanent financial recoveries of piled incurred losses.

Assessing the Cost Information Usage at Higher Education Institutions - Case Study in Croatia and Bosnia and Herzegovina

In order to improve the planning process, calculation, allocation, and cost control at higher education institutions, it is necessary to keep track of costs, not only by the nature and places of costs but also by different programs and types of services. Since the information and data are the most important resources in the process of managing, the deployment of an adequate financial information system is the assumption in assurance of better governing with higher education institutions. Assuming that the appropriate accounting information system infrastructure is a support of the successful management, its content and structure should be seen as a function of increasing efficiency of financial management and evaluation of management in higher education institutions, not only during the execution of the objectives of the budget. The purpose of this paper is to show the current usage of cost information at higher education institutions in Croatia and Bosnia and Herzegovina through empirical research and to investigate the opinions of accountants and financial officers regarding the possible implementation of cost accounting methodology at higher education institutions. The paper is analyzing the accounting system in Croatia and Bosnia and Herzegovina at higher education systems, providing the information about the negative sides of the current accounting system for the recording and allocation of costs. A theoretical background about the usage of accrual accounting basis and cost accounting methodologies at higher education systems of different European countries is showing better governance and financial sustainability of higher education institutions that have already introduced cost accounting methodology. The empirical research is pointing out the difference in the observed two countries. The difference is visible through accounting systems, usage of cost information, and usage of cost allocation methods for calculating costs per student.

Business Processes in the Function of Cost Management in Healthcare Institutions

This paper is dealing with the importance of business processes regarding costs tracking and cost management in healthcare institutions. Various changes within the health care system and funding of hospitals require the introduction of management information systems and cost accounting. The introduction of cost accounting in public hospitals would allow the planning and control of costs, monitoring of costs per patient or service and the calculation of indicators for the analysis and assessment of the economic performance of the business of public hospitals and lead to the transparency of budget spending. A model that would be suited to the introduction in the public hospital is full cost allocation model based on activities or processes that occur, known as the ABC method. Given that this is a calculation of cost of services provided through various internal business processes, it is important to identify all business processes in order to be able to calculate the costs incurred by services. Although the hospital does not do business with the aim to make a profit, they must follow all the costs (direct and indirect) to be able to calculate the full costs i.e. the price of the service provided. In addition, the long-term sustainability of business activities in terms of funding difficulties and the continuous growth of cost of services provided, hospitals must control and reduce the cost of the program and specific activities. Therefore, the objective of this paper is to point out the importance of business processes while introducing ABC method.

ABC Method in Healthcare Institutions Based on Business Processes

Hospital, as an object implementing the ABC method has a more complex structure of output (services), users, activities and financial flow from ordinary production company. Making appropriate cost structures, the structure of business processes and cost drivers requires detailed knowledge and study of the processes within the hospital system for the application of ABC methods at the organizational level. Detailed knowledge of the hospital system will help the management of hospitals in use of limited resources and in savings with the constant rising costs of health care services. The key objective of this paper is to show possible model regarding ABC implementation in healthcare institution in Republic of Croatia based on business processes. The model has identified internal business processes and associated costs incurred attributable to provided services in a public hospital. The paper is presenting field research, snap shots of business processes and employee interviews and analysis of accounting data about the costs attributable to business processes.

Development of Cost Accounting in Higher Education Institutions in the Republic of Croatia

This paper aims to present the level of development of cost accounting in the Higher Education Institutions (further HEI’s) through conducted empirical researches. The main objective of this paper is to highlight that for quality decisions making at HEI’s it is necessary to have relevant information about costs. Using different methods for managing costs, information about costs are significantly different. Based on that, the process of decision making and decision made on costs could vary. To examine the level of cost accounting used in HEI’s, the research based on the questionnaire was conducted in the year 2006 and 2014. The questionnaire was sent to all HEI’s in Republic of Croatia, more precisely to the Deans of HEI’s and to the Head of Accounting of HEI’s. The authors have set the main hypothesis that cost accounting tools are still not enough used in Croatian HEI’s. The results of conducted research have shown that cost accounting in Croatian HEI’s is still undeveloped and still not sufficiently used in the process of decision making and funding of HEI’s. Moreover, authors have highlighted that some cost accounting instruments, e.g., cost allocation, are used less in 2014 than in 2006. The authors have also pointed out several potential obstacles for implementation of cost accounting in the accounting systems of HEI’s. Also, in the paper, the authors have provided possible recommendations for implementation and better usage of cost accounting in Croatian HEI’s.

Performance Indicators Development in Function of Higher Education Quality Monitoring

The aim of this paper is to explore issues of higher education institution’s performance indicators development in Croatia. Accepted standards and regulations require defining of key performance indicators, but the process and the method of their choice and the definition is optional to institutions. Higher education institutions are obligated to measure and track performance. They need to define key performance indicators, in accordance with the Standards and Guidelines for Quality Assurance in the European Higher Education Area (ESG) and defined strategic goals. Tracking performance is important for program financing of higher education and performance monitoring of selected institution’s program goals and higher education in general. For higher education institutions, it is important to monitor and improve the quality. For that purposes they need to develop adequate and comparable performance indicators. In order to create comparable indicators it is necessary to conduct a detailed analysis of performance measurement of related higher education institutions in Croatia and the European Higher Education Area. The basis for performance measurement is information that institution owns, acquires and processes. In order to be relevant, indicators need quality information basis for their measurement. This paper analyzes the current performance indicators of selected institutions from Croatia, Great Britain, Canada and Australia. Based on the analysis, as the result of work, we propose indicators for one higher education institution. Authors propose a methodology for development of indicators, as well as a way of measuring and monitoring performance.