In 2006 the Olympic committee decided to dedicate £400 billion in order to establish a Cost Control system. This system is composed of two core elements: a planning process and a responsibility accounting scheme. The planning process requires enumerating the Olympic committee plans of action, which are the construction of an Olympic Park, the improvement of the transports, the development of sustainable issues, the celebration of cultures and the organization of the security; all those plans must then be implemented and cost. The Olympic Games set up being the unique output; a job costing system appears to be the most suitable. Responsibility accounting involves the creation of units called responsibility centers, which have control over costs in the organization.
[...] Conclusion By setting a cost budget and creating a responsibility accounting system, the Olympic committee will be able to ensure an effective Cost Control. However responsibility accounting is based on the controllability principle, which means that Management accountants should be held responsible only for the results they can control. In other words, it is suitable to charge to a responsibility center only the costs that can be influenced by the manager of that center. In the case of the Olympic Games, the impact of construction price inflation and the response of contractors to the Delivery Authority's invitation to tender are uncontrollable, and thus cannot be charged to the Olympic Committee. [...]
[...] Performance reports and Analysis 2.1 Cost Centers After the planning process the second core element of Management Cost Control is Responsibility Accounting which involves the creation of responsibility Centers. A responsibility center can be defined as unit in the organization that has control over costs, revenues, or investment funds”. The Purpose of responsibility centers is to decentralize authority so that divisional directors can take decisions, and thus devote more efforts to the control of the costs. In order to realize those cost centers, the Olympic Committee has accumulated the costs associated with the Games into tree main categories: the “Olympic costs” (expenditures on building new venues and facilities), the “staging costs” ( expenditure to inspire people to join and wider costs (Expenditures on Media, Security ) Control Board Each of the cost centers is controlled by a different organism. [...]
[...] They will then be able to start the transports enhancements, the installation of new water and energy systems (that will serve the Olympic Park), and the construction of the venues and the Olympic village. The committee expects to end those yards in 2011, or even earlier (2009) in the case of the water and energy fixings Costing System There are two basic types of costing systems an organization can adopt: the costing system” and process costing system”. The job costing system required in organizations where each unit or batch of output is unique”. [...]
using our reader.