Example from Bolivia

PROSALUD Cost Accounting and Cost-Effective Reporting

Some organizations have developed financial management systems that track the costs of services and relate service outputs to cost. These organizations have computerized their financial information, which permits costs and costs per unit of service to be analyzed more easily. The computerized financial information system developed by PROSALUD in Bolivia for tracking and allocating costs allows the organization to allocate indirect and administrative costs to each type of service and to determine the cost of providing each service. The system is broken down into modules that can be integrated to produce a cost report. What makes this system unique is its ability to merge information from any of the modules to produce reports on unit cost of services for each PROSALUD's health centers and clinics. The system's features include:

• Financial transactions kept in two currencies (recording the exchange rate at the time of each transaction) to avoid problems related to inflation;
• An accounting module using standard accrual double entry accounting procedures;
• An inventory module, which uses average purchase cost to determine the cost of stock on hand;
• A service statistics module, which produces aggregate information on services provided at each health center;
• A fixed assets module using depreciation and "revaluation" method that permits a manager to factor in the effect of inflation on depreciation;
• A payroll module, which prepares the monthly payroll and records other employee-related financial transactions such as advances, vacation accrued, etc.;
• A billing module, which monitors accounts receivable for services provided and which produces invoices for clients.