Resource consumption Accounting

The comprehensive, fully integrated, dynamic management accounting which gives the managers decision support information for the optimization of the enterprise is referred to as resource consumption accounting.  This very new RCA approach is largely based on the German Grenzplankostenrechrung approach which allows the use of the activity based drivers in to the field of accounting.

From 2000, this method has emerged as an effective management accounting approach at The Consortium of Advanced Management International in the section of Cost Management of the RCA group which commenced in the month of December 2001. There are several case studies which were carried from then on to validate and to refined this approach. Several research papers, journal publications and several other studies were for about seven years to reckon  the scope and the benefits of the RCA approach .

Later in the month of July 2009, this Resource Consumption Accounting method has been recognized in the International Good Practice Guidance Publication by the Committee of International Federation of Accountants and the Professional Accountants in Business.

Concept of the Resource consumption Accounting :

The concept of the Resource consumption Accounting can be differentiated from other concepts on various dimensions. The main things that distinguished the RCA concepts from other management accounting approaches are the GPK method of Germany which is quantity based operational modeling that utilizes the proportional costs and the fixed costs that is available at the company’s resource level. The concept of the “Attributable cost” given by Gordon Shillinglaw is also included in it. Another important trade mark of the Resource consumption accounting is the flexible utility of the activity based method. The activity based method can be used where ever needed following the restrictive rules and specific regulations. The integration in the value chain of the management accounting into other operational systems is another advantage in here. The effective utilization of the basic operations transactions as the primary source for the quantitative and the financial data instead using the usual ledger is another boast for the resource consumption accounting method. Moreover, in the resource consumption method the principle of responsiveness is replaced with the principle of variability for the operational modeling.

“Evaluating the costing Journey: Costing Levels Continuum Maturity Model” is a guide that mainly concentrates on the universal principles of costing. It acknowledges the ability of RCA to reach higher level of accuracy and visibility, when compared to the costing methods that are activity based on the managerial accounting information. The Resource Consumption Accounting institutes are established to concentrate on the acquisition of the RCA knowledge.

Questions:

• What is RCA?
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