Southern Pacific developed a cost information system to improve the planning, controlling, and decision-making process affecting operating expenses. A new accounting structure, or chart of accounts, was required to link expenses to specific responsibility centers, and identify other significant relationships. This approach fell under the general concept of responsibility accounting, where expenses were charged to the individuals/departments responsible for their creation and control. The new structure satisfied the requirements of senior management for improved use of company resources through an accounting system responsible to its needs and, at the same time, met the accounting demands of the Interstate Commerce Commission and other regulatory bodies. A detailed explanation and simplified diagram of the system can be found by clicking on the following link: https://splives.org/wp-content/uploads/2024/04/Pace-Accounting-System-Revised-January-1-1977.pdf. This version of the explanation of the system was dated January 1, 1977.
Emerson Consultants were hired to assist in designing the new system which was named PACE, an acronym for Planning And Control of Expenditures.