Implementing cost accounting in Saudi higher education: Drivers, progress, and resource implications

Type of the article: Research ArticleAbstractThis study examines the adoption and implementation of cost accounting practices in Saudi Arabian public universities following their shift from cash-based to accrual-based accounting. Guided by the resource-based view (RBV) framework, it tests four hypotheses related to drivers of cost adoption, cost tracking and allocation abilities, calculation method frequencies, and resources needed for successful cost implementation. Data from 171 financial managers and accountants across all 30 public universities were analyzed using descriptive statistics, correlations, and regression models. Results reveal a negative correlation between cost adoption and organizational factors, with external pressures – including regulatory requirements and negotiations over funding – serving as the primary catalysts. Universities demonstrate a strong capacity to track and allocate direct costs, with over 90% able to manage them; however, indirect cost management remains limited, with only 12% able to allocate indirect costs, indicating early-stage development. Cost implementation is further positively associated with the use of detailed cost calculation and allocation methods and perceived organizational resource needs, including financial policies, skilled personnel, and advanced management systems. Findings suggest that, despite external pressures, resource constraints hamper full implementation. These findings support the RBV assertion that internal capabilities are crucial for gaining a strategic advantage. Successful cost implementation depends on internal resource development and organizational capacity-building, which can transform cost accounting from a symbolic compliance exercise into a strategic tool for transparency, decision-making, and institutional efficiency.