IMPLEMENTING ACTIVITY BASED COSTING: THE CASE OF A CENTRAL BANK IN A SOUTH ASIAN COUNTRY

The purpose of this paper is to examine why and how a Central Bank of a South Asian Country (CBSAC), the monetary authority and the regulatory body of finance and banking sector, adopts and implements Activity Based Costing (ABC) practices. The primary data were collected by conducting semi structured interviews and observing organizational processes. Secondary data were collected through reviewing various documents such as guidelines to activity wise time recording sheets, annual reports and online sources including the CBSAC web site and CBSAC intranet. In the data collection process, higher emphasis was placed on data triangulation. Data analysis was carried out following an explanation building approach. The study identified that the appointment of the new Governor in 2006 was the major driver for moving towards ABC method at the CBSAC. Currently through time recording sheets, activity wise cost of each department is being tracked and assigned to the CBSAC functions. The CBSAC has taken several initiatives to improve the ABC system which has propelled it towards a more time driven ABC.