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Frequently Asked Questions A lot of activities seem
related to what I do. Which activities and how many activities should
I use? Q: A lot of activities seem related to what I do. Which activities and how many activities should I use?A: When an employee's work is described by one ABC activity and the end goal is described by another ABC activity, the employee should code to the activity that most accurately describes the immediate work performed, and not the goal. When an employee's work appears to be appropriately described by several ABC activities, the employee should code to the activity that most accurately describes the work performed. The Service should not direct employees to select only a certain number of activities. However, if the number of activities selected is becoming burdensome (not including coding for leave taken), the employee should determine if a fewer number would be as accurate without being burdensome to the employee and timekeeper. For example, the Bureau of Land Management (BLM) has suggested that their employees should not code to activities in increments of less than two hours cumulative during a pay period. Generally for the BLM, this has translated to most employees coding to no more than 7 to 10 different activities in a pay period (not considering complexities related to using multiple budget activities or accounts). Q: What are the benefits, purposes and goals of Activity-Based Costing/Management? A: The Fish and Wildlife Service is using the ABC/M tool because it:
Q: Who is doing ABC/M?FWS is required, as are other agencies within the Federal government, to develop full-cost accounting systems. ABC/M is an essential tool to help accomplish this task and support the President's budget and performance initiative. There are many other federal agencies currently implementing ABC/M, some of which include organizations within:
Q: What's in it for us at Field Stations?A: ABC/M will:
Q: Exactly how does ABC/M focus efforts on increasing efficiency and quality/delivery of products/services?ABC is a cost management tool designed to provide insight into the real costs of an organization - its activities (the work that it performs) and its outputs (products and services). ABM takes the ABC data and adds another dimension of information, providing insight into why the work of an organization is done (cost drivers) and how well the work is done (performance measures). Managers typically manage activities not resources. By understanding what an organization does one can begin to challenge whether the organization is doing the right thing. Typically departments or programs are organized vertically. Activities that contribute to a process function horizontally - any department of the organization can perform cross-functional activities. By measuring performance, an organization will continually improve activity costs, quality and response time. By sharing this information across the organization employees can understand and act upon efforts to continually improve their activities and processes. To gain further insight into how ABM works please read An Introduction to Activity-Based Cost Management at the Fish and Wildlife Service or refer to the training tab on the FWS ABC website.
Q: How will ABM be conducted within FWS and DOI?A: The implementation team is in the process of mapping FWS activities to cost objects. Cost objects at FWS are DOI End Outcomes, FWS Operational Goals and Program Goals. The Programs will be identifying activity drivers and activity output quantities to determine unit costs for activities. By completing these tasks ABM will help the Service integrate the performance management system with cost. For more information, please read ABC/M and its Role in the FWS Strategic Planning Process.
Q: What are the techniques built into ABC/M that will allow managers to identify inefficiencies and potential improvement opportunities?A: ABC/M provides the cost and linkages to performance information that will be analyzed. Integrated performance management utilizes process analysis tools and techniques such as root cause analysis, Pareto analysis, cycle time analysis, business process analysis, benchmarking, trend analysis, and flow charting to identify areas of study or review. This type of analysis will help managers identify inefficiencies and potential improvement opportunities. No one technique works in every situation. Training will be developed to teach FWS Program Managers how to analyze ABC/M information and identify process improvement opportunities.
Q: Where (in what legislation) is the requirement for all Federal agencies to develop full cost accounting systems?A: The requirement for all Federal agencies to develop full cost accounting systems is found in the Federal Accounting Standards Advisory Board (FASAB) Statement of Federal Financial Accounting Standards Number 4 (SFFAS No. 4): "Managerial Cost Accounting Concepts and Standards for the Federal Government" made effective July 31, 1995. The document mandates that each federal agency measure and report the full cost of outputs in general purpose financial reports so that total operational costs and total unit costs of outputs can be determined. The full cost of an output produced by an organization or responsibility segment "is the sum of (1) the costs of resources consumed by the segment that directly or indirectly contribute to the output, and (2) the costs of identifiable supporting services provided by other responsibility segments within the reporting entity, and by other reporting entities." These full costs should be assigned to outputs through the costing methodologies or cost finding techniques that most appropriately suit a segment's operational environment. ABC/M is not a mandatory costing method for each federal agency to develop a full cost accounting system. However, it is the preferred and most accurate technique. Federal cost information is important and is a concern for both internal and external parties when assessing operating performance, stewardship systems, and management of the federal government:
This requirement for managerial cost accounting on a regular and consistent basis supports numerous legislative actions, made before and after the SFFAS No.4 over the past decade, that aim to improve the management and performance of the federal government:
Through the President's Budget and Performance Integration initiative, augmented by the PART and Circular A-11, the Administration will strive to implement the objectives of the GPRA and the CFO Act. The nature of these legislative mandates requires entities to develop full cost accounting systems and report cost information on a consistent and regular basis. Statement of Federal Financial Accounting Standards Number 4: "Managerial Cost Accounting Concepts and Standards for the Federal Government," July 31, 1995, paragraph 71. Statement of Federal Financial Accounting Standards Number 4: "Managerial Cost Accounting Concepts and Standards for the Federal Government," July 31, 1995, paragraph 7. Statement of Federal Financial Accounting Standards Number 4: "Managerial Cost Accounting Concepts and Standards for the Federal Government," July 31, 1995, paragraph 69. Performance and Management Assessments, Budget of the United States Government, FY 2004, pp. 9. Statement of Federal Financial Accounting Standards Number 4: "Managerial Cost Accounting Concepts and Standards for the Federal Government," July 31, 1995, paragraph 69.
Q: Exactly how will ABC/M allow managers to better justify budget requests or determine whether adequate resources are available?A: ABC/M is just one of the many tools managers should be using. ABC identifies the cost of processes, activities, and cost objects. Cost information is generated through the ABC model. The model provides a three-dimensional look at those costs: resource costs, activity costs, and cost object costs. Cost objects at FWS are DOI End Outcomes, FWS Operational Goals and Program Goals. ABM uses ABC information to focus efforts on continuously improving the organization's ability to perform the mission more efficiently while improving the products and services provided to the customers. Whether the product or service was completed, or met quality or schedule requirements is determined through performance and workload indicators. Measuring cost is an integral part of measuring performance in terms of efficiency and cost-effectiveness. Efficiency is measured by relating outputs to inputs. It is often expressed by the cost per unit of output. While effectiveness in itself is measured by the outcome or the degree to which a predetermined objective is met, it commonly is combined with cost information to show "cost-effectiveness." Performance Measurement requires both financial and non-financial measures. Managers can improve efficiencies by controlling and reducing costs, and finding and avoiding waste. With accurate cost information, managers can:
View a list of Department of Interior ABC/M FAQs. View a list of Employee Time Reporting Worksheet FAQs.
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