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