The federal government’s SIC is coordinated by the Cabinet of the Vice Minister of Finance, has been designed by the National Treasury (also manager of SIAFI), and was developed by the federal IT public company SERPRO (as an in-house developed system). It is available to all ministries at the federal level, as well as some cost analysis units created in the legislative and judiciary. The noteworthy characteristic of SIC is the capacity to integrate information from various systems (budget, financial management, accounting, asset management, purchasing, and payroll) in a single database. The system applies modern technologies such as a powerful data warehouse. The cost model adopted follows the one used in the private sector; however, this model had to be adapted to Brazilian public sector circumstances and to the information and systems available. For instance, as public accounting in Brazil does not adopt all accrual accounting standards, such as depreciation of fixed assets and revaluation of assets at market value, some "accounting adjustments" have to be made. The system allows for "accounting adjustments" (in essence to anticipate the adoption of full accrual accounting in Brazil planned to be completed in 2014) and generates adequate information for basic cost calculations. However, as there are no "cost centers" but "administrative and budgetary executing units", other adjustments were also needed. Thus, in addition to financial information, SIC aggregates other information necessary for calculating costs. For example, spending on personnel had to be allocated to the programs “manually” and quantitative information regarding outputs also had to be included for certain calculation.
SIC can generate cost information from two perspectives: (i) from the general to the particular (deductive or top-down approach), produced by the central agencies in a more aggregated form, and (ii) from the particular to the general (inductive or bottom-up approach), produced by budget executing units, for which other information is available including the quantitative information of goods and services produced. This model was denominated "the bus station" because it is the place in which information is collected and consolidated according to a variety of interests. The model is strongly focused on integration of available information and is responsible for a substantial reduction of time to implement it because it was not necessary to use pilot projects to test the system before expanding it to all entities. These characteristics allow SIC greater flexibility and provide managers a tool to enter in more details and adapt the system outputs to their needs. In summary, the model allows for "flexibility" without losing "comparability", two fundamental elements to evaluate performance and results of the system.
SIC started its operation in the first half of 2010. 150 employees were trained. All of them are members of cost committees created in each ministry and in units of the legislature and judiciary. The initial objective is to encourage the use of cost information at the level the system is capable of producing. However, one major challenge is the lack of culture for using cost information in the public sector. Another challenge is the lack of incentives and accountability procedures: many managers are uncomfortable with the idea of being evaluated by the cost of goods and services they produce. Some of them argue that there is no market comparator for many of the services. The tradition in the public sector is still one of compliance and financial controls, not of cost and productivity. Finally, the government still has to define how cost information will be used in the budget process.
The cost project is described in detail in the article "Guidelines and Conceptual Model of the Public Sector Cost System of the Brazilian Federal Government”, by Victor Holanda and Nelson Machado, and in the book "Cost System in the Federal Public Administration: A State Policy ", by Victor Holanda, Fernando Lattman-Weltman, and Fabricia Guimaraes. Overall, the article and the book describe the main factors that contributed to the implementation of SIC: an adequate theoretical approach aligned with the Brazilian circumstances; high-level ownership by the authorities; and adequate communication and coordination among stakeholders.
For more information, access the article and the book, visit: http://www.socialiris.org/livroSIC
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