1. Management Accounting in the
Public Sector
• Micro Accounting System (MAS)
• Performance Measurement and the Concept
of 3Es

2. Micro Accounting System
(MAS)
• Background
– First guidelines was issued in July 1992 under
Public Administration Improvement Circular
no. 3/92.
– Provides detail accounting with emphasis of
costing outputs -- services & products of each
agency.

3. Objectives of MAS
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to measure cost performance,
for cost comparison
to know cost trends
to increase cost awareness among government
managers.
to improve accountability
to help in decision making & pricing
for strategic planning
for optimum utilisation of resources.

4. Scope of MAS
• MAS implementation is for all government
agencies, whether services oriented,
production oriented, revenue earning or not.

5. Weaknesses of Present System
– cash basis for expenditure & revenue.
– Vote books & other records provide little
information to managers,
– not providing management with information on
how resources are allocated to various output &
how efficient is the utilisation of resources.

6. Environment to implement MAS
successfully
• Client’s Charter -- specify output & time
frame to provide the services.
• TQM -- for overall improvement on quality
of services.

7. Implementation Strategy
• Implementation Machinery
– commitment by top management,
– need a steering committee to plan, supervise,
guide, monitor & coordinate.
– chief facilitator to suvervise the implementation
team.
• Training
– the implementation team need to be trained.

8. • Implementation Approach
– tackle the direct costs first,
– adopt activity based costing for routine &
standardised output,
• Follow up
– meeting to discuss progress, problems &
sharing of experience,
• Computerised MAS
– to trace costs of outputs.

9. Basic Requirements of MAS
Implementation
• Output Identifrication
– products or services produced should be
specific & measurable,
• Identification of activities & processes,
– help to identify inputs.

10. • Input Identification
– itemise systematically.
• Sources of Input of data records
– eg. fixed assets register, vote books, personnel
records.

11. Master Plan for Implementation
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In house training,
Pilot implementation,
Review & improvement,
Replication/adaptation by other division.

12. Methodology of MAS
• Examine the objectives, programs &
activities,
• Determine the output & responsible officer,
• Monitor costs & performance of output,
• analyse the cost information (variance
analysis) and determine the corrective /
remedial actions.

13. Challenges to MAS
• Environment:
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not as private sector,
new concept,
based on accrual concept,
no clear ‘bottom line’.
lack of competition,
does not reward cost saving,
cost data does not reftact manager’s decisions.

14. Future Direction of MAS
• implement accrual accounting
• more power to managers to improve &
change,
• establish interdepartmental changes,
• encourage cost savings.

15. Performance Measurement
• Increased demand from public for better
transparency and services
• Continuous improvement for better
services
• The organisation’s strategies and objectives
will influence the selection of performance
measurement. This information must be
communicated to the public.

16. The Concept of 3Es
Efficiency is measured by comparing output with
inputs. The more output for inputs, the more
efficient the organisation
Effectiveness is concern only with outputs. It
refers to the success or failure in achieving the
organisation’s objectives.
Economy is only concern with inputs

17. Tutorial Questions
• Trace the development & objectives of
MAS in government.
• Explain the strategies to ensure successful
implementation of MAS.
• List & explain basic requirements of MAS
implementation.
• Identify challenges to implement MAS

18. • Explain the strategies to ensure successful
implementation of MAS.
• List & explain basic requirements of MAS
implementation.
• Identify challenges to implement MAS.
.