COSTS IN PUBLIC SERVICE

The need to improve the performance of Public Administration has become increasingly evident in this decade. Firstly, because the pattern of Brazil's inclusion in world economy requires better performance of the public sector, given the systemic character of competitiveness. Secondly, because the fiscal State crisis requires the government to do more with less resources. Thus, priority should be given to the quality of public expenditure. The proposal presented is for the government to develop and implement activity based on cost systems (ABC), as these possess the necessary flexibility for the service sector and are useful tools in restructuring and management improvement processes. The ABC systems are superior to the traditional costing methods since: 1) they reduce distortions of indirect and fixed cost allocation; 2) they not only find costs, but also show how and where costs are formed, which encourages effective change in the attitude of managers.