Perhaps have a look at the IFRS rules, I think there might be some discrepancy between both systems MAC and FAC

Dear Kamal,

In my opinion, internal control and internal audit techniques can do this duty well. As you surely know, the most important role of activity based costing is tracing costs more accurately to outputs in complex processes of producing products and rendering services particularly in high tech industries.

sincerely,

Zahra

Excellent question. Use throughput accounting which will help you control the right things. This will help you to get out of the cost world and cost optimization and focus on optimizing throughput and reduce WIP , consequently, your working capital needs will come down.

ABC is best used for cost analysis and can be used in making decisions that relates to the costing functions of the organizations.

not disputing the fact that management is a comprehensive activity that requires the integration of several functions to make plausible decisions

Dear Kamal,

Trying to achieve multiple goals with one tool seems extremely dangerous to me. I remind you of the law of requisite variety due to Ashby. To control a complex system you need a control system of the same complexity

I also disagree with Zahra's comment that “the most important role of activity based costing is tracing costs more accurately to output”. This was the initial slogan of the promoters. There is another view of the ABC. The inventory of activities carried out within the company or any other organization highlights all the productions carried out and should lead to questioning the value produced. This only makes sense for the environment by considering together the activities necessary to make an offer. We therefore go from a vision by activity to a vision by process and the output of the process is not a product or a service but a bouquet of value attributes: a physical product, a delivery time, a level of quality, the possibility of customization, etc.

Moreover, relying on the concept of causality must naturally lead to a distinction between different cost objects, the product, the customer, the distribution channel, the geographic region, etc.

If financial reporting emphasizes distribution channels and the cost system only delivers product-specific analyzes, there is an inconsistency that needs to be addressed by changing the architecture of the cost system.

In short, we must ensure the consistency of the tools and not seek to merge them.

Pierre Mevellec

Dear Mr. Kamal Abdul Aziz Al-Nakib

You can add or develop elements of internal control at each stage of the ABC costing system.

Thank you