Part III - Annual TRAC

Section A: Overview

Overview of the cost attribution process

19. The methods to be used are shown in the figure – overview of the cost attribution process:

     

20. These methods cover the following:
    • attribution of academic and research staff costs. Researcher and lecturer costs should be attributed directly to an activity where possible (e.g. a Research Assistant to Research). Otherwise academic staff should complete time allocation schedules using robust methods to provide information for use in attribution. These are not timesheets: they might include, for example each academic completing three time allocation schedules that together cover a 12-month period, within each three-year cycle – see Chapter C.1 academic staff time;
    • attribution of non-staff costs. Attribution methods are to be based on activity-based costing concepts. Cost drivers are used to attribute costs, held in cost pools, to activities – see Section D all other costs;
    • calculation of cost adjustments. Two cost adjustments are made:
      • an infrastructure adjustment which bring in an estates cost that is closer to the full economic cost of maintaining the institution’s physical infrastructure. This is usually understated in institutions’ financial statements;
      • a cost of capital employed which ensures that TRAC costs cover the costs of financing and contain a margin that meets the costs of restructuring and future development needs.

      See Annex 15 (cost adjustments).

21. In addition, the Funding Councils require income to be reported alongside costs in the annual TRAC return. Attributing income as well as costs is also a valuable internal management tool for reviewing performance and developing processes that support sustainability. Internal and external benchmarking of surplus and deficits can provide assurance as to the robustness of the methods used. See Annex 16 (income allocation).
    

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