International Conference Internationalization o f Higher Education: North-South Perspectives THE ALLOCATION OF CENTRAL SUPPORT SERVICES TO ACADEMIC DEPARTMENT BUDGET AT PUBLICLY FUNDED UNIVERSITIES ■ EVIDENCE FROM VIETNAM Đặng Đức Sơn, Asso Prof University o f Economics and Business - VNU Hanoi, Vietnam Abstract In common with many publicly funded organizations, the original purpose of accounting systems in universities is to satisfy the needs of stewardship and financial reporting, and any management accounting information that often tends to be simply a by - product of the financial reporting process (Pendledary & Algaber (1997), Christiaens &Wielemakers (2003)) This situation was particularly evident in the case of universities in Western countries Many universities perform accounting process merely to satisfy the need o f the Government, but not attempt to address the need for relevant financial information for internal decision making and control, specially for providing information o f the allocation of central support services to the budget determination in the university management This issue is continuing to be a “hot topic" in the discussion of management accounting by universities and is not irrelevant to stateowned universities in the transitional economies of China and Vietnam The aim of this paper is to revise the reporting requirements by the Vietnam’s Ministry of Finance (MoF) to require state-funded universities to disclose financial information and the allocation of central support service costs incurred at central support services, including library, computing, training, finance, and personal department to the academic department therefore increase the awareness of budget determination factors in management process The results of the investigation reveal that very few universities adopted the bases for the allocation of central support service costs to management accounting process Consistence was not found in the use of allocation bases and the universities tended to use top-slicing method in preparing budgets for central support services Keywords:.university management, cost allocation, accounting, Vietnam INTRODUCTION ABC approaches the problem of allocating central costs (for example the library) by focusing on the activities that take place (for example processing loans) and their relationship to 'driver' variables (for example number o f graduate students) While ABC is theoretically attractive, and in some practical circumstances has proved to be beneficial, particularly in manufacturing organizations, certain difficulties arise in its implementation in a university (Mitchell, 1996) The original purpose of accounting systems in universities is to satisfy the needs of stewardship and financial reporting, and any management accounting information that often tends to be simply a by product o f the financial reporting process (Pendledary & Algaber (1997) Venieris and Cohen (2004) reviewed the process of changing costing system in Greek Universities and found that the Greek universities’ accounting change would, according to the declared goals of the new system, control their performance and monitor their efficiency over resource spending 164 International Conference Internationalization o f Higher Education: North-South Perspectives One of the main uses o f ABC in university financial control is to improve the efficiency of management process by developing overhead allocations to faculty and departments (Goddard and Ooi, 1998) Pendledary & Algaber (1997) used 120 questionnaires to explore the charging of the costs of central services, namely library, computing, registry, finance, marketing and personnel to academic and other departments in the UK universities The study found that about 50% of the respondents did not charge the costs and there was a variance in using methods of charging (Table 2) Table C harging the Coats of Central Services an d Allocation Basts Mríkữ Iii 4fCJrđ*ẬỈiig Gtữtođi Sềtnùcti Đo M , Lib rary Computing Registry SB 38 39 S irv ĩt* ĩn ttm ữ ỉ Aiĩoiuttd A&ềếitutit* Comraitĩ Utuptqfuf- Ĩ4 Hữ, Jỉữ , M , JWfc %+ 50.6 50.5 30 31 »1 3 7.7 7.7 7.9 Cíurgt OuX Ckargt % m , 4S.+ 49.4 50.6 39 39 sft K aance 40 3? 40 M ark etin g 38 3» 52.0 49.4 35 39 Pteraanrwl 48.0 JlfC4Ĩ % * 7SL9 79.5 SL.5 Mdffat 15.4 31 a s a ữ l D D D D 2S 53 8Z.B B4.S 3 fl-6 7.7 D I2 B 10.5 V ** Q.o a.a O.Q o.a 0.0 OJO s a a a I B.e 7.7 •iniirrp* P p n H lp H arw & A lơ a h p r Í1 Q Q } A deeper analysis on the Pendledary & Algaber's survey has also shown that number of students and number of staffs were the main allocation bases of the charging the costs of central services to the academic and other departments Á l ỉ m i m Baits jViiUiimnr ỉìn* CV.vJraf ••f/i'.K itJM n Sth'rf/xJ ẲVnvVtỉ Rãỉis JiUJ&Wn LiW iity Cúinpiì ùtìy ReiịÌMív Fjniuici M ufkctiny P m o a iiíl M 31 SI it 2!) 3!i ỉiữiỉiSỉìiđiiư a w ! Staff SJaJfJ^iiiuUrs Hũ *A jVff tit 30,(1 19.4 ÍL S 22.6 « J2.1 i a.ĩ 3 1+ 3.2 tư 3.2 I0 J 4U 10 1' r 14 Jtfumbiti jV* r s 1) •i O ih tf ĩiãsừ % 2,1.3 2Ỉ.IÌ