Accounting information for decision-making in Palestine: an empirical evidence

This work aims at making a theoretical contribution about the way businesses adapt product costing to enhance resilience in challenging operational conditions in implementing strategic management planning. This study argues that Traditional Cost Accounting (- TCA) is gradually becoming less relevant in the present climate of global competitive business. TCA under-costs product, because indirect costs involved in production are not allocated fairly and the price of a finished product becomes inherently noncompetitive. Also, financial and non-financial information become not reliable for management planning. Such problems become a more urgent priority when the external environment is exceptionally restrictive as the case is under Israeli army occupation in Palestine. Activity-Based Costing (-ABC) that is a newer system that enables managers to cost more accurately, is the system without a business has hindered its commercial viability. This study analyses the concept of cost accounting in manufacturing industry, where Israeli army erected 648 check points that restrict Palestinians interlinks for the movement of their goods. Palestinian economy was therefore in recession and businesses were feeling the pinch of reduced revenues. This empirical study draws upon a survey of 32 ISO 9000 certified manufacturing enterprises that aspire to modernity in Palestine. The executives were asked for an interview and to complete a questionnaire of 74 questions. The research question was how do enterprises produce effective costing practices under challenging operational environment in Palestine? The findings of this study have showed that enterprises in Palestine were able to improvise and to produce their own version of bespoke ABC, termed “pseudo-ABC”. The enterprises were of small size that had demonstrated greater commitment to the principles of ABC product costing accuracy, and reporting both financial and non-financial information. “Pseudo-ABC” system in Palestine tended to display less complexity than the typical ABC systems in UK. There were no cost centres nor drivers as in typical ABC. A strong correlation was found in different applications of “pseudo-ABC” by industry in Palestine, whereas a contrasting perception is persistent on the success and importance of typical ABC applications worldwide.