REGULATORY AND MANAGEMENT ACCOUNTING

Regulatory Accounting is the mechanism by which Regulatory Bodies can know the cost structure of their providers, measure their relative efficiency both at the company and activity levels, reducing information asymmetries and thus be able to determine a fair and equitable tariff to be paid by users. It helps companies to improve their cost management.
Regulatory Accounting is usually oriented towards a system of Activities Based Costing (ABC Costing) which, unlike traditional accounting, allows the allocation of costs taking into account the activities or processes that originated them.
The Activity-Based Costing system leads to improved cost management by relying on more rigorous allocations. Based on these concepts, both regulators and companies enjoy the benefits of knowing the true cost of the activities they perform, guiding the provider towards the path of efficiency and continuous improvement (Management Accounting).