Calculating Prime Costs Under the New Framework of Public Finances Accounting – The Special Features of Higher Education

Abstract

At the end of last year the government adopted the new higher education strategy. The “gear shifting” strategy in higher education was soon followed by the regulation swinging into high gear on 1 January 2014, which affected the accounting system of budgetary institutions. Accrual-based accounting was introduced in the budgetary sector, which can significantly help achieve the objectives set in the higher education strategy, creating an information base for a management-oriented governance model based on performance measurement. The possibility is now available, but the extent to which the sector can take advantage of the extra information in managing the institutional system remains to be seen. Government Decree No. 4/2013 created the possibility of prime costs calculation based on a closed accounting information base, thereby making it possible to measure the performance of each period on the basis of the actual use of resources. In addition to discussing the special features of the regulatory environment, this paper addresses the theoretical and methodological issues of prime costs calculation, including the definition of different prime cost contents for each objective and assessing the possibilities of allocating general costs.