IDEAS home Printed from https://ideas.repec.org/h/zbw/ofel19/196071.html
   My bibliography  Save this book chapter

Temporal Anomalies in Budgetary Cost Control of Municipal Corporations

In: 7th International OFEL Conference on Governance, Management and Entrepreneurship: Embracing Diversity in Organisations. April 5th - 6th, 2019, Dubrovnik, Croatia

Author

Listed:
  • Bačun, Dinko

Abstract

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.

Suggested Citation

  • Bačun, Dinko, 2019. "Temporal Anomalies in Budgetary Cost Control of Municipal Corporations," 7th International OFEL Conference on Governance, Management and Entrepreneurship: Embracing Diversity in Organisations (Dubrovnik, 2019), in: 7th International OFEL Conference on Governance, Management and Entrepreneurship: Embracing Diversity in Organisations. April 5th - 6th, 2019, Dubrovn, pages 27-40, Governance Research and Development Centre (CIRU), Zagreb.
  • Handle: RePEc:zbw:ofel19:196071
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/196071/1/ofel-2019-p027-040.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ulrike Malmendier & Geoffrey Tate, 2005. "CEO Overconfidence and Corporate Investment," Journal of Finance, American Finance Association, vol. 60(6), pages 2661-2700, December.
    2. Chapman, Christopher S. & Kihn, Lili-Anne, 2009. "Information system integration, enabling control and performance," Accounting, Organizations and Society, Elsevier, vol. 34(2), pages 151-169, February.
    3. Feng, Mei & Li, Chan & McVay, Sarah, 2009. "Internal control and management guidance," Journal of Accounting and Economics, Elsevier, vol. 48(2-3), pages 190-209, December.
    4. Robert Scapens & Mostafa Jazayeri, 2003. "ERP systems and management accounting change: opportunities or impacts? A research note," European Accounting Review, Taylor & Francis Journals, vol. 12(1), pages 201-233.
    5. -, 2001. "Information, information management and governance," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 27495, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rikhardsson, Pall & Yigitbasioglu, Ogan, 2018. "Business intelligence & analytics in management accounting research: Status and future focus," International Journal of Accounting Information Systems, Elsevier, vol. 29(C), pages 37-58.
    2. Hrazdil, Karel & Li, Xin & Suwanyangyuan, Nattavut, 2022. "CEO happiness and forecasting," Global Finance Journal, Elsevier, vol. 52(C).
    3. Lauri Lepistö, 2014. "Taking information technology seriously: on the legitimating discourses of enterprise resource planning system adoption," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 25(3), pages 193-219, December.
    4. Thorsten Knauer & Nicole Nikiforow & Sebastian Wagener, 2020. "Determinants of information system quality and data quality in management accounting," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 31(1), pages 97-121, April.
    5. Leiby, Justin, 2018. "The role of consultants and management prestige in management control system adoption," Accounting, Organizations and Society, Elsevier, vol. 66(C), pages 1-13.
    6. Taipaleenmäki, Jani & Ikäheimo, Seppo, 2013. "On the convergence of management accounting and financial accounting – the role of information technology in accounting change," International Journal of Accounting Information Systems, Elsevier, vol. 14(4), pages 321-348.
    7. Wunhong Su & Chunlin Wang & Zhong‐qin Su, 2024. "Association between foreign background of executives and firm goodwill impairment risk," Bulletin of Economic Research, Wiley Blackwell, vol. 76(1), pages 223-250, January.
    8. Rong Gong, 2023. "CEO overconfidence and the tone of press release," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(2), pages 2081-2108, June.
    9. Gallemore, John & Labro, Eva, 2015. "The importance of the internal information environment for tax avoidance," Journal of Accounting and Economics, Elsevier, vol. 60(1), pages 149-167.
    10. Sara Trucco, 2016. "Managerial Information and Integrated Accounting Systems. The Perception of Italian Managers," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2016(1), pages 91-104.
    11. Mohamed Z. Elbashir & Steve G. Sutton & Habib Mahama & Vicky Arnold, 2021. "Unravelling the integrated information systems and management control paradox: enhancing dynamic capability through business intelligence," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(S1), pages 1775-1814, April.
    12. Markus Arnold & Florian Elsinger & Frederick W. Rankin, 2021. "The Unintended Consequences of Headquarters’ Involvement in Decentralized Transfer Price Negotiations: Experimental Evidence," Management Science, INFORMS, vol. 67(12), pages 7912-7931, December.
    13. Bürkland, Sirle & Zachariassen, Frederik, 2014. "Developing an ERP technology: Handling incompleteness of the system," Scandinavian Journal of Management, Elsevier, vol. 30(4), pages 409-426.
    14. Kallunki, Juha-Pekka & Laitinen, Erkki K. & Silvola, Hanna, 2011. "Impact of enterprise resource planning systems on management control systems and firm performance," International Journal of Accounting Information Systems, Elsevier, vol. 12(1), pages 20-39.
    15. Hilary, Gilles & Hsu, Charles & Segal, Benjamin & Wang, Rencheng, 2016. "The bright side of managerial over-optimism," Journal of Accounting and Economics, Elsevier, vol. 62(1), pages 46-64.
    16. Guoli Chen & Craig Crossland & Shuqing Luo, 2015. "Making the same mistake all over again: CEO overconfidence and corporate resistance to corrective feedback," Strategic Management Journal, Wiley Blackwell, vol. 36(10), pages 1513-1535, October.
    17. Kanellou, Alexandra & Spathis, Charalambos, 2013. "Accounting benefits and satisfaction in an ERP environment," International Journal of Accounting Information Systems, Elsevier, vol. 14(3), pages 209-234.
    18. Sung, Hao-Chang & Ho, Shirley J., 2023. "Disclosure strategies for management earnings forecasts: The role of managerial compensation structures, overoptimism, and effort," Journal of Contemporary Accounting and Economics, Elsevier, vol. 19(1).
    19. Ahsan Habib & Mostafa Monzur Hasan & Haiyan Jiang, 2018. "Stock price crash risk: review of the empirical literature," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(S1), pages 211-251, November.
    20. Vu Quoc Thong, 2017. "Factors defining the effectiveness of integrated accounting information system in ERP environment – Evidence from Vietnam’s enterprises," HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE - ECONOMICS AND BUSINESS ADMINISTRATION, HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE, HO CHI MINH CITY OPEN UNIVERSITY, vol. 7(2), pages 96-110.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:ofel19:196071. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: http://www.ciru.hr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.