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Sat, 7 Apr 2007 12:37:41 -0400 |
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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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