The Smooth Implementation of Activity Based Cost Management (ABCM) in the Public Service Organisation (PSO) in South Africa

Abstract

This paper describes the procedure that allows public service organization to smoothly switch from traditional costing system to an Activity Based Costing system at low risk and with minimum investment. The aim of many contemporary national, provincial and local is to reinvent government through the application of private sector strategies and techniques (Kearney, Feldman, and Scavo 2000). The fundamental objective of reinvention is to strive for a government that works better and costs less. The purpose of this paper is to investigate if ABC can be a valuable tool to understand costs and provide more accurate costs of services in a public service organisation in South Africa; and to determine and implement the process improvements strategies in the public service organisation in South Africa. The results achieved show that the municipality would have an increase in profitability and be able to improve cost control. The overall results achieved indicate that ABCM has a significant role to play in the Public Service Organisation in South Africa.