A Proposed Model for Analyzing the Cost Deviations, Using RCA (Resource Consumption Accounting) Approach with Application on a Saudi Hospital

The aim of this study is to present a proposed model for analyzing the deviations of indirect costs according to the RCA approach, and to indicate the lack of traditional approaches in this field. A case study is conducted on a Saudi hospital to show the deviations of indirect costs and their effect on three types of decisions: decisions on the extent of exploitation of available resources, decisions to provide information to decision makers, and performance evaluation decisions. It should be noted that the case study required the need to survey the opinions of the hospital administrators and cost accountants, as well as a group of faculty members and their assistants. The analysis of deviations according to the traditional approach does not provide correct or significant monitoring information, and the reports prepared in light of this approach provide inaccurate and ineffective signals to provide information to decision makers and to evaluate performance, or allocation of available resources. Accordingly, a model is proposed in which the deviations of distributing the indirect costs in accordance with the RCA (resource consumption accounting) approach are divided into six deviations: two of which affect the value of the distributed costs and four deviations that do not affect the value of distributed costs. The research resulted in a number of recommendations, including the following: to emphasize the need for academic expansion in teaching the RCA approach, especially in practical terms, and to emphasize the need to extend the application of RCA both in terms of distributing and in terms of measuring deviations, in the industrial or service sector, the public or private sector.