Innovating cost accounting practices in rail transport companies

Purpose: The main purpose of the study is to present and discuss an accounting innovation in the cost measurement system of rail transport companies. Methodology: We identify the distinctive features that cost accounting systems should have in order to capture the particular structure of the production process of rail transport companies and develop an innovative accounting practice that addresses the specific features of railway services, particularly the high fixed costs associated with the infrastructure. This accounting innovation is applied to Trentino Trasporti, a medium-sized, privately owned passenger railway company operating in the Trentino Alto Adige region of Italy. Results: Evidence suggests that the new accounting practice facilitates the operational connection between the company’s resources and their consumption during the provision of transport services. Practical implication: This connection enables companies to identify new opportunities for improvement and cost optimisation by finding the real origins of cost consumption in the provision of rail transport services