Degree Name

Master of Commerce (Hons.)


Department of Accounting and Finance


This paper adopts a contingency framework to investigate the impact of organisational factors on the decision of adopting costing systems by hospitals in Victoria, Australia. Three categories of variables (environmental, organisational and managerial) were identified in previous research studies and this study seeks to examine their effects on the adoption of costing systems in subject hospitals.

Environmental factors include competition and government regulation; organisational factors include hospital bed size, area location, hospital group membership, and teaching status; and managerial factors include the involvement of top management and accounting staff in the decision of adoption of a costing system.

A questionnaire survey was sent to the Chief Accounting Officers or Financial Controllers of all hospitals in Victoria to collect information. The response rate was 47.49 percent. The three categories of variables are tested using a logit model. Hospital bed size and teaching status are found to be significant variables which influence the decision of adopting a costing system. The results provide some insights into adoption by hospitals of costing systems in an Australian context. They are useful for developing costing systems in other states in Australia and they have implications for hospital regulation policy.