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Important Documents
FY12 Activity Dictionary (PDF - 1066 KB)
ABC Coding Templates
T&A Worksheet
FWS Operational Plan
Directorate Rules for ABC
FY05 - FY10 Subactivity Codes & Programs
FY05 - FY06 Crosswalk
FWS to DOI Crosswalk
FY06 - FY08 Included / Excluded Costs
How to Correct ABC Errors in FFS
DOI Strategic Plan
How to Compare Cognos to Brio (Word - 1.2 MB)
Management Tools
Manager Analysis Workbook
What-if Scenarios for Resource Planning

 

General ABC/M FAQs

  1. What are the benefits, purposes and goals of Activity-Based Costing/Management?
  2. Who is doing ABC/M?
  3. What's in it for us at Field Stations?
  4. Exactly how does ABC/M focus efforts on increasing efficiency and quality delivery of products/services?
  5. What are the techniques built into ABC/M that will allow managers to identify inefficiencies and potential improvement opportunities?
  6. Where (in what legislation) is the requirement for all Federal agencies to develop full cost accounting systems?
  7. Exactly how will ABC/M allow managers to better justify budget requests or determine whether adequate resources are available?
  8. What are some specific examples of how FWS is using ABC data?
  9. Is ABC a budget-cutting tool?

1. What are the benefits, purposes and goals of Activity-Based Costing/Management?

The Fish and Wildlife Service is using the ABC/M tool because it:

  • Provides greater visibility to manage costs of programs across regions and to improve efficiencies
  • Allows managers to manage by the work being performed rather than by budget and to refocus resources on activities that provide the "best bang for their buck"
  • Provides a way to measure program performance
  • Justifies budget requests (OMB allocates funding based on performance) and assures budget supports the best value results
  • Supports the implementation of the President's Management Agenda for Budget and Performance Integration, and enhances the organization's ability to meet other external requirements such as GPRA, the CFO Act, and the Clinger-Cohen Act by providing full cost for activities and programs
  • Supports the development of Standard Operating Procedures (SOP's) across the seven FWS regions and CNO
  • Is a necessary and significant step in the development of a performance management system
  • Provides a means to describe the effects of budget cuts on program performance

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2. Who is doing ABC/M?

FWS is required, as are other agencies within the Federal government, to develop full-cost accounting systems. ABC/M is an essential tool to help accomplish this task and support the President's budget and performance initiative. There are many other federal agencies currently implementing ABC/M, some of which include organizations within:

  • Department of Agriculture
  • Department of Commerce
  • Department of Defense
  • Department of Homeland Security
  • Department of Interior
  • Department of Labor
  • Department of Treasury
  • Department of Transportation
  • Department of Veterans Affairs
  • Federal Bureau of Investigation
  • General Services Administration

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3. What's in it for us at Field Stations?

ABC/M will:

  • Help to identify what your work efforts are really contributing to, and what it really costs to provide your products and services
  • Help you make a business case to get adequate resources-money, people, equipment, and/or supplies -to do your job more effectively
  • Show a basis of comparison between similar stations across the Service and determine a baseline standard for performance so that stations can share ideas/technology to increase performance and efficiencies

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4. Exactly how does ABC/M focus efforts on increasing efficiency and quality delivery of products/services?

ABC is a cost management tool designed to provide insight into the real costs of an organization - its activities (the work that it performs) and its outputs (products and services).

ABM takes the ABC data and adds another dimension of information, providing insight into why the work of an organization is done (cost drivers) and how well the work is done (performance measures). Managers typically manage activities not resources. By understanding what an organization does one can begin to challenge whether the organization is doing the right thing. Typically departments or programs are organized vertically. Activities that contribute to a process function horizontally - any department of the organization can perform cross-functional activities. By measuring performance, an organization will continually improve activity costs, quality and response time. By sharing this information across the organization employees can understand and act upon efforts to continually improve their activities and processes.

To gain further insight into how ABM works please read An Introduction to Activity-Based Cost Management at the Fish and Wildlife Service or refer to the training tab on the FWS ABC website.

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5. What are the techniques built into ABC/M that will allow managers to identify inefficiencies and potential improvement opportunities?

ABC/M provides the cost and linkages to performance information that will be analyzed. Integrated performance management utilizes process analysis tools and techniques such as root cause analysis, Pareto analysis, cycle time analysis, business process analysis, benchmarking, trend analysis, and flow charting to identify areas of study or review. This type of analysis will help managers identify inefficiencies and potential improvement opportunities. No one technique works in every situation. Training will be developed to teach FWS Program Managers how to analyze ABC/M information and identify process improvement opportunities.

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6. Where (in what legislation) is the requirement for all Federal agencies to develop full cost accounting systems?

The requirement for all Federal agencies to develop full cost accounting systems is found in the Federal Accounting Standards Advisory Board (FASAB) Statement of Federal Financial Accounting Standards Number 4 (SFFAS No. 4): "Managerial Cost Accounting Concepts and Standards for the Federal Government" made effective July 31, 1995.

The document mandates that each federal agency measure and report the full cost of outputs in general purpose financial reports so that total operational costs and total unit costs of outputs can be determined. The full cost of an output produced by an organization or responsibility segment "is the sum of (1) the costs of resources consumed by the segment that directly or indirectly contribute to the output, and (2) the costs of identifiable supporting services provided by other responsibility segments within the reporting entity, and by other reporting entities." These full costs should be assigned to outputs through the costing methodologies or cost finding techniques that most appropriately suit a segment's operational environment. ABC/M is not a mandatory costing method for each federal agency to develop a full cost accounting system. However, it is the preferred and most accurate technique.

Federal cost information is important and is a concern for both internal and external parties when assessing operating performance, stewardship systems, and management of the federal government:

  • Congress and federal executives use cost information to compare alternative courses of action, to make decisions about allocating federal resources, to make program authorization decisions by assessing costs and benefits, and to evaluate program performance
  • Government managers, the primary users of cost information, use reliable and timely cost information to help ensure that resources are spent to achieve expected results and outputs, and alerts them to waste and inefficiency
  • Citizens, news media and interest groups use program cost information to judge whether resources are allocated to programs rationally and if the programs operate efficiently and effectively.

This requirement for managerial cost accounting on a regular and consistent basis supports numerous legislative actions, made before and after the SFFAS No.4 over the past decade, that aim to improve the management and performance of the federal government:

  • The CFO Act of 1990 "states that agency CFOs shall provide for the development and reporting of cost information and the periodic measurement of performance."
  • The GPRA Act of 1993 holds federal agencies accountable for using resources wisely and achieving projected program results. It requires agencies to identify both long-term and annual goals, collect performance data, and justify budget requests based on these data.
  • In August 2001, President Bush announced his ambitious agenda - The President's Management Agenda - for reforming management of the government and improving the performance of federal programs. The five government-wide initiatives of the PMA aim to establish a strict system of accountability, both to him and to the public, and represent longstanding management challenges for the federal government: (1) Strategic Management of Human Capital; (2) Competitive Sourcing; (3) Improved Financial Performance; (4) Expanded Electronic Government; and (5) Budget and Performance Integration.
  • The Office of Management and Budget's Program Assessment Rating Tool (PART) was introduced in 2002 to assess government programs in a transparent manner. The PART is an accountability tool that "evaluates a program's purpose, design, planning, management, results and accountability to determine its overall effectiveness" and funding.
  • The OMB Circular A-11 of 2006 helps agencies prepare and submit materials required for OMB and Presidential review of agency requests and for formulation of the FY 2008 Budget, including development and submission of performance budgets. The performance budget replaces the annual performance plan required by the GPRA.

Through the President's Budget and Performance Integration initiative, augmented by the PART and Circular A-11, the Administration will strive to implement the objectives of the GPRA and the CFO Act. The nature of these legislative mandates requires entities to develop full cost accounting systems and report cost information on a consistent and regular basis.

Statement of Federal Financial Accounting Standards Number 4: "Managerial Cost Accounting Concepts and Standards for the Federal Government," July 31, 1995, paragraph 71.

Statement of Federal Financial Accounting Standards Number 4: "Managerial Cost Accounting Concepts and Standards for the Federal Government," July 31, 1995, paragraph 7.

Statement of Federal Financial Accounting Standards Number 4: "Managerial Cost Accounting Concepts and Standards for the Federal Government," July 31, 1995, paragraph 69.

Performance and Management Assessments, Budget of the United States Government, FY 2004, pp. 9.

Statement of Federal Financial Accounting Standards Number 4: "Managerial Cost Accounting Concepts and Standards for the Federal Government," July 31, 1995, paragraph 69.

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7. Exactly how will ABC/M allow managers to better justify budget requests or determine whether adequate resources are available?

ABC/M is just one of the many tools managers should be using. ABC identifies the cost of processes, activities, and cost objects. Cost information is generated through the ABC model. The model provides a three-dimensional look at those costs: resource costs, activity costs, and cost object costs. Cost objects at FWS are DOI End Outcomes, FWS Operational Goals and Program Goals. ABM uses ABC information to focus efforts on continuously improving the organization's ability to perform the mission more efficiently while improving the products and services provided to the customers.

Whether the product or service was completed, or met quality or schedule requirements is determined through performance and workload indicators. Measuring cost is an integral part of measuring performance in terms of efficiency and cost-effectiveness. Efficiency is measured by relating outputs to inputs. It is often expressed by the cost per unit of output. While effectiveness in itself is measured by the outcome or the degree to which a predetermined objective is met, it commonly is combined with cost information to show "cost-effectiveness." Performance Measurement requires both financial and non-financial measures.

Managers can improve efficiencies by controlling and reducing costs, and finding and avoiding waste. With accurate cost information, managers can:

  • Compare costs with known or assumed benefits of activities, and make decisions to reduce resources devoted to activities that are not cost-effective
  • Compare and determine reasons for variances between actual and budgeted costs of an activity or a product
  • Compare cost changes over time and identify their causes
  • Identify and reduce excess capacity costs
  • Determine whether to do a project in-house or contract it out

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8. What are some specific examples of how FWS is using ABC data?

The ABC data is currently being used in many ways throughout the Service. The Directorate used the ABC data as one input in the budget formulation process for both the FY07 and FY08 budgets. (However, for budget formulation they primarily have been focusing on performance measure data, i.e., what is the Service producing in terms of acres restored, species recovered, etc. They have not been looking at specific costs of work activities.) Regionally, Program and Assistant Regional Directors and their staff are using the data to obtain a better understanding of the work that their employees are doing on a quarterly basis.

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9. Is ABC a budget-cutting tool?

One of the widest misconceptions is that ABC is a budget-cutting tool. ABC is used in the budget formulation process because it allows the Directorate to understand how work activities are contributing to the goals of the Service and the Department. In the current declining budget environment, the Directorate is forced to make difficult decisions in allocating the budget and cuts would be made regardless of whether ABC is used in the process. By understanding the approximate costs of the Services' Operational Plan Goals, the Directorate was able to allocate its limited funds to the Programs making the greatest contribution to the Service and Department goals.

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Last Modified: 9/24/2008