The Complete Guide for CISA Examination Preparation by Cascarino Richard E.;

Author:Cascarino, Richard E.;
Language: eng
Format: epub
Publisher: Auerbach Publishers, Incorporated

The financial aspects of service center management involve the acquisition of the whole infrastructure and the most cost-effective price to the organization. This does not necessarily mean that the price of acquisition will always be the lowest because the aforementioned aspects such as reliability and availability must be taken into consideration. Only when costs are fully known and attributable to individual business functionality can cost benefit be truly and accurately identified.

The IT auditor needs to be familiar with the many terms encountered in costing service center management. Most important of these is the distinction among:

Direct costs, which are related to the specific item or function and can be attributed to it in a feasible way.

Indirect costs, which are related to the specific item or function but cannot be attributed to it in a feasible way. Indirect costs are then allocated or assigned using an appropriate cost allocation method.

Variable costs, which change in direct proportion to the volume of outputs.

Fixed costs, which do not vary with volumes produced, but are fixed, for example, equipment rentals payable irrespective of usage.

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