Principles of developing cost classifiers for management accounting and budgeting systems

When formation management accounting and budgeting systems, financial managers of companies face the need to develop classifiers, including cost classifiers. The system of classifiers is the basis of management accounting. This article can be considered as a methodical and practical guide to the formation of a comprehensive system of directories for cost management, which must meet the needs of the budget system and be effective in terms of setting up the accounting process. Within the framework of the proposed concept, special attention is paid to the cost centers, their classification and the principles of allocation. In addition, the position of the cost classifiers in the general system of classifiers is determined, as well as their significance for budgeting.

In most Russian companies, the issue of the need to form a management accounting system has long been resolved positively. The goals of its implementation are obvious, we note only two main ones: ensuring planning, coordination, control of production and motivation of managers through budgeting systems; providing information to the company's management that is necessary and sufficient for making strategic and operational management decisions, such as choosing the optimal product portfolio and production volume, setting prices, buying / manufacturing, investing / disinvesting in a unit or product, etc.

When developing a management accounting system after determining the financial structure of an enterprise, the main circle of users of the system and their requirements, it becomes necessary to form classifiers. The system of classifiers is a kind of foundation for management accounting. It underlies budgetary forms and their interrelations, forms of reporting, calculation methods, the structure of information systems.

Changing already used classifiers is a long and time consuming process, as it is often difficult to establish in which methodological documents and information systems they are already applying.

Sometimes the main focus is on the development of budgetary forms or reporting forms, on the basis of which a system of classifiers is subsequently developed. For it, in this case, the following drawbacks are typical: one-sidedness: provides only one management function (planning, accounting, control or analysis); inflexibility: based on specific forms of reports, it does not allow the compilation of other reports using the same data; insufficient completeness and inconsistency: the system of budgets and reports may not fully represent all aspects of financial and economic activity.

It should be understood that the development of a system of classifiers is an independent activity in which existing budgetary and reporting forms can be used as material, but one can not directly transfer them to classifiers. From the very beginning, it is necessary to carefully approach the construction of an optimal system of classifiers, which will not require processing in the future.

Management accounting is often defined as the process of identifying, analyzing, measuring, processing, storing and communicating data on the production and economic activities of an organization. Inside it, these data are used by specialists in the management of the financial services organization or independently, or for this purpose consulting companies are involved. In management accounting, data are generated not by legal entities, in accordance with the procedure established in accounting, but by structural subdivisions of the firm such as branches, investment projects, divisions of the management company and others. In management accounting, they are called the Financial Responsibility Centers. According to the Financial Responsibility Centers, incomes, expenses and cash flows are analyzed

As a result of management accounting, 3 reports are formed:

• 1.    Income and Expense Budget (BDR) / Profit and Loss Statement

• 2.    Cash flow budget (CDM) / Cash Flow Statement

• 3.    Expected Balance / Management Balance Sheet,

These reports are also called "financial budgets". In addition to financial budgets, "management" budgets are also included in the management reporting. They are support budgets.

Operational and financial budgets are linked together in forms in which the final information of the budget of one is the input information for the other. Consequently, the summary data from the operational budgets is input to the financial budget items on which they are built.

This interrelated set of reports (budgets) is called a "budgeting system". It is an integral part of management accounting. And when they consider the system of "budgeting and management accounting", they understand that "budgeting" is an integral part of management accounting because it contains a set of interrelated reports. The notion of management is broader, since along with budgeting includes a policy of management accounting, which is based on accounting standards and chart of accounts. On them the management account is conducted.

When developing a system of classifiers, the following principles should be adhered to:

• •    The basis for the accounting and planning processes should be the same directories - the unity of the classifiers for accounting and planning will allow you to compare planned and actual values.

• •    Classification of objects should be conducted according to their behavior, nature, etc. Funds must be classified.

• •    Classifiers should be interrelated and coordinated among themselves. To do this, it is necessary to develop matrices that will reflect how those or other classifiers correlate.

• •    Classifiers should be tied to financial responsibility centers - a certain set of articles of classifiers must correspond to each responsibility center.

• •    The completeness and transparency of the classifiers should be ensured -all their positions should be detailed to the extent necessary for monitoring all significant aspects. As a limit to the degree of detail, you can include the "Other" position in the classifier, which should account for no more than 5% of the total amount for all positions in the classifier.

• •    Unambiguous and mutually exclusive - each position of the classifier must unambiguously describe the object, while all available articles should be mutually exclusive: each operation relates to only one and only one of the articles.

The main types of classifiers - hierarchical lists of selected accounting objects - include the following.

• •    Activities.

• •    Basic business processes.

• •    Financial Responsibility Centers:

• •    income centers / cost centers;

• •    profit / investment centers.

• •    Enterprise resources.

• •    Cost elements.

• •    Costing items.

• •    Directories of indicators.

• •    Directory of counterparties.

• •    Asset types.

• •    Types of obligations.

• •    Types of income / costs.

• •    Types of operations.

When implementing the system of management accounting, it is necessary to carefully approach the development of a system of classifiers. An optimally developed system of classifiers will not require further processing in the future, entailing the processing of the entire management accounting system.

In the end, the classifiers are linked to the accounting and budgetary subsystems in the form of reference books of accounts and budget items.

Leading consultant of the Department of Management Technologies of the Department of Management Technologies and Design of Accounting Systems of the Audit and Consulting Group "Business Systems Development". He graduated from the Faculty of Economics and Management of the Ural State Technical University, majoring in Information Systems in Economics. He was engaged in the development of management accounting and budgeting systems in the group of companies "Java", United Metallurgical Company, JSC "Russian Railways". Author of several scientific publications. (Moscow)