Information Needs in Higher Education Institutions: Stock Valuation or Decision-Making?

Abstract

Numerous higher education institutions apply a full costing system in their accountingmodel due to the imposition of formal agents (governments/funding institutions), or bysuggestion of informal agents (associations). This paper analyzes whether therationale applied by these agents to justify the use of the full costing rather than thedirect/variable system is consistent with the theoretical bases underlying both costingsystems. Methodologically, we review the mainstream literature that explores the linksbetween the management accounting model and the use of its informative outcomesfor the decision-making in higher education institutions. We conclude that there exists agap between the theory-based statements and the information needs of theseinstitutions. Remarkably, the full costing system falls short of adequateness for theseinstitutions, which need information for their managerial decision-making processrather than for other industries' decisions such as stock valuation. Thus, this papercontributes to a critical view on the use of full costing systems and calls for redirectingcurrent practices towards other more effective partial costing systems. Our findingshave implications for academic, managers and policymakers interested on theimplementation and improvement of managerial accounting in public higher educationinstitutions.

Factors affecting the adoption of activity-based costing in a South African state university

“…Studies (Sanches et al 2022) have suggested that the failure of ABC implementation is often because of contextual factors such as organisational values, culture and climate, rather than the process of implementation itself. Activity-based costing aims to reduce distortions caused by arbitrary allocation of indirect costs in traditional systems.…”

“…Support costs, such as information technology (IT), financial aid, library, security, admissions, examinations and student services, that were previously considered as fixed and irrelevant in decision-making have become increasingly important areas of resource consumption. Traditional costing systems often distort costs and do not reflect the increasing complexities, advanced technology and multiplicity of programmes and services that are now offered by universities (Sanches, Souto & Gago-Rodríguez 2022). These changes demand more accurate cost allocation techniques.…”