Hello Cindy,

As the UK equivalent of an CPA with experience in both the commercial and 
heritage sectors here's my spin on your question:

In large commercial organisations it is common practice to re-charge salary 
and wage costs to the various cost centres depending on how time has been 
allocated. In the not-for profit heritage organisation I work for however, this is 
considered too 'sophisticated' and administratively cumbersome a process to 
implement at the current time. Also the view is taken that as such salaries are 
fixed costs (overheads) what point is there in re-charging them anyway? 

As an Accountant, I take a middle view on this: IF we are talking about "cost 
centres" then there is indeed an arguement in favour of not moving the salary 
costs around. HOWEVER if we are talking about "profit centres" i.e the activity 
brings in some income then it is worth charging salaries against the income 
earned to see if there is a net contribution. So if, for example, you run an 
event which is chargeable to the public then it is reasonable to charge the 
salary costs involved in making that event a reality together with all the other 
direct costs you mention.

If we are applying for a Grant or funding to put on a programme that involves 
hiring extra staff for the duration of the project then we have to charge the 
salary costs involved against that. That is very clear.

On the whole managers seem to have enough difficulty managing their own 
departmental budgets (which includes salary costs of those working for them) 
without the added sophistication of cross charging - which returns to my 
earlier point. My guess is that within the next 5 - 10 years as pressure on the 
bottom line continues to tighten, we may well see more on the activity budget 
management front but in the meanwhile my experience suggests that the 
popular view is that "keep it simple" is best!

That's not much of an answer but hope it helps.

The views expressed above are my own and not necessarily those of my 
organisation.

Regards,

Jerry Symonds - Senior Internal Auditor
Historic Royal Palaces
Surrey
England

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