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New TRAC guidance that applies from 2014-15 has now been published. This is hosted on the HEFCE web site on behalf of all funders. The current TRAC requirements continue to apply for TRAC reporting for the year ending 31 July 2014, but once the 2013-14 TRAC reporting is complete, the HEFCE web site will become the sole resource for TRAC as well as financial sustainability materials.

Part I - Overview

Section A: General Overview

Introduction – what is TRAC?

  1. TRAC (the Transparent Approach to Costing) is the standard method now used for costing in higher education in the UK. TRAC was developed out of work by the Joint Costing and Pricing Steering Group and was introduced after the Transparency Review in 1999 – a government policy study overseen by the Science and Engineering Base Co-ordinating Committee.I After five years of implementation (finishing in 2004), TRAC is now being consolidated and extended to cover full economic costing (fEC) at project level.
  2. The development of TRAC has been the responsibility of the Joint Costing & Pricing Group (JCPSG) – an HE sector body who have been supported by consultants – J M Consulting Ltd. Further information is available on the JCPSG website.ii
  3. TRAC now includes two separate but related costing processes:

    Annual TRAC: an annual retrospective attribution and reporting of costs.
    From 2000/01 all UK HE institutions (about 165) attribute costs from their audited financial statements to activities at an institutional level. This is primarily a public accountability process and leads to annual reporting by institutions of the costs of Teaching (split into publicly-funded and non-publicly-funded), Research (similarly split), and Other core institutional activity. Institutions report in January each year, based on the accounts for the previous year (so in January 2005, they reported costs based on 2003/04 accounts data).

    From January 2006, the Funding Councils require that the annual reporting at an institutional level will include income as well as costs. Institutions will, in effect, report their surplus and deficit position on each of the five activities listed in the previous paragraph.

    The annual TRAC process can also be used to provide management information for internal use, including results by department, and costs per student. It also provides the data (financial and personnel) that is used to calculate the indirect cost rate, the estates charges and charge-out rates for other directly allocated costs such as research facilities and technicians. These are then used when costing research and other projects on a fEC basis.

    TRAC fEC: the forecast and accounting for full economic costs at a project level.
    From 2005 all institutions are calculating the full economic costs (fEC) of each research project, on a reliable and comprehensive basis. This is then used to set the price for grants made by Government (the Research Councils and OGDs (Other Government Departments)) and informs the price on projects for other sponsors.

    The fEC of a project is made up of directly incurred costs, directly allocated costs, and indirect costs (the latter two types of cost use the rates produced from the annual TRAC process). This classification determines how they are recorded and validated. Directly incurred costs are recorded on the basis of actual expenditure. Directly allocated and indirect costs are recorded on the basis of standard costs established at the time of project approval.

  1. Annual TRAC is a holistic approach, producing costs of Teaching, Research and Other activities. The initial focus of TRAC fEC is on research projects and there is detailed guidance in this area because the public funding of Research is now based on fEC. At present, there is not this level of detailed guidance for Teaching programmes.
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