Cost Accounting and the Federal Government Washington will spend $782 billion more from 2000 to 2003 than it did between 1996 and 1999--an increase of $5,000 per household. With public demand to reduce federal spending, the Federal Government is rethinking the way that it provides goods and services. In order to cut spending the Federal Government is looking for new approaches to old problems. The biggest problem being, accountability. One approach to the accountability problem is to implement managerial cost accounting practices throughout the Federal Government and it’s programs. Cost accounting would help the government focus policy and funding decisions around relevant information. It would help program managers in monitoring performance and in reporting results to Congress and the taxpayers. The five standards for managerial cost accounting that have been suggested are:
1. Accumulating and reporting costs of activities on a regular basis for management information purposes.
2. Establishing responsibility segments to match costs with outputs.
3. Determining the full cost of government goods and services.
4. Recognizing the costs of goods and services provided by one federal entity to another.
5. Using appropriate costing methodologies to accumulate and assign costs to outputs. The costs in a federal government cost accounting system would be divided into two categories: program costs and costs not assigned. Each of these has sub-categories.
Program Costs Costs Not Assigned

Direct Costs High-level general management costs
Indirect Costs Administrative support costs
Non-production Costs

The Federal Government will be able to use this cost information to budget, manage cost, and manage finances. In politics we always hear talk about the federal budget, and budget cuts and fluctuations. With the cost information gathered