Over View
Background to the formation of the Institute
There is no gainsaying the fact that the need to effectively managed cost in Nigeria has become a major issue. In the past lip service has been paid to the imperativeness of addressing in a strategic manner how to position cost management in the socio-economic and political decision making process. Cost management has been defined by several experts. Hilton et.al.., (2000) defined Cost management as a philosophy, an attitude and a set of techniques to create more value at lower cost. Cleary (2002) opined that cost management is managing cost including people as an investment in customer value, at a price that reflect profitable business and as a tool for competitive advantage. Omoregie (2000) described effective cost management as the comprehensive appreciation of cost as a vital element with a deliberate effort aimed at ensuring that it is commensurate with the level of activity of an organization. It must be understood that managing cost requires the requisite skill and experience in the art of cost management.
Today, the country is experiencing dwindling fortune that is threatening its economic stability and government is harping on the need to cut cost. Recently, the Minister of Finance set up a steering committee on the formation of Efficiency Unit to be charged with the responsibility of managing the cost of governance in Nigeria. This underscores the need by all stakeholders to more than ever before pay adequate attention to the institutionalization of the practice of cost management in Nigeria as a capacity building body in the art of Cost Management. This was the driving vision of the founding members of the Institute of Cost Management in 2000.
Attempts have been made in the past to get the legislative node for the Institute to be granted chartered status to enable it play the needed role in adequately positioning cost management in Nigeria. Perhaps out of the lack of adequate information on the essence of the profession and the obvious need for the practice in the scheme of governance this has been frustrated. In 2004 the bill to Charter the Institute was frustrated at the House of Representative at the second reading on the ground that the Institute was just too young in existence to be chartered whereas Institute of Stock Brokers of Nigeria was chartered within 3 years of its existence. Some members of the House were of the opinion that Accountants can manage cost why granting chartering status to another body without taking into consideration the distinct roles of Cost Managers in the economy. Others were of the opinion that all Institutes cannot be chartered and that sometime ago Taxation Institute was chartered and separated from Accountant’s function. The impact made over the years by the Chartered Institute of Taxation of Nigeria since chartering with respect to the drive for taxation in Nigeria underscores the importance of moving from parochial reasoning with respect to the need for professionalism of key and identified discipline that can benefit the economy.
Again in 2008, the Institute made another debut but through the Senate sponsored by Senator Uzamere from Edo State but due to his limited commitment the bill could not proceed beyond 1st reading.
The prevailing state of things in the economy even with the existence of Accountants and the fact that Institute of Cost management still exists till now justify the need to have a rethink on the need to adequately legislate on the status of the Institute in Nigeria.
Over View
Global Trends in Cost Management
The concept of cost management has long gained prominence in the advanced countries of the world. Little is, however, known and practiced in the developing economy. There may have been some internally focused and tactical control system aimed at cost saving, however, current global trends demand for a more scientific and well researched approach to the actualisation of effective cost management. The major professional emphasis has been that of accounting for and measurement of cost which are the key focus of Financial, Cost and Management Accounting practices. Hence developing Cost Management Systems is aimed at the proactive management of cost.
Hopwood (2006) had opined that the issue of cost has become a strategic agenda that should not be left to the corporate bean counters. He also posited that managing cost should be an interdisciplinary and multidisciplinary practice. This means that an organization seeking to achieve results must embrace cost management. Also, Cooper (1995) had advocated the need for companies to be more proactive in the way they manage costs as corporate survival is dependent upon their abilities to develop sophisticated cost management systems.
It would, however, appear that many firms, government Institutions have not taken advantage of the benefits of effective Cost Management and the profitable roles of Cost Managers. Different methods are being deplored by organizations to achieve cost reduction without adequate information as to their effectiveness and efficiency as well as the involvement of professional Cost Managers. Impact of these on the performances of business and organizations are subject of many economic discussions.
For those organizations that have made attempt to embrace cost management, it has been done with minimal appreciation of how to effectively position the practice for optimum results.
Over the years Cost Management emphasis has brought into existence many cost management institutions, cost management consultants and cost management friendly organisation and companies in the United Kingdom and United States of America working tirelessly to ensure that organisations maximize their profit potential and also impact positively on the good governance for sustainable and visible economic development. In the USA cost management was championed by Consortium for Advanced Manufacturing International (CAM), a leading edge Cost Management institution based in Texas, USA. In the UK, the Association of Cost Management Consultants has also made impact in developing the concept of cost management as a strategic approach to national development. Cost management practice has no doubt helped the developed economy achieved economic resilience for many years. Organizations are investing in researches aimed at managing costs.
However there have not been clear-cut regulations of the practice of cost management by a very definite authority and responsibility clarification aimed at achieving the best practice in the management of cost in Nigeria. The formation of the Institute is one of the major and fundamental steps in the economic development process of our country aimed at sharing from the global experience with local initiative.
Our Blog
Check Out Our Latest News
