JCPSG | TRAC Guidance

Part V - TRAC fEC

Section F: Post-award

Recording costs

  1. The costs incurred on each project should be recorded.
  2. DI costs should be recorded as the actual expenditure is incurred. This is the case even when the actual costs exceed the original DI level (and might therefore be ineligible for funding). However, costs recorded in the DI category should be DI costs. In particular, the recording of maternity, paternity and paid sick leave depends on their classification:
    • for RAs and staff in the directly incurred category of cost, they are DI costs. Sponsors generally allow virement within DI costs, and will often consider funding them even if it means that the original DI estimate is exceeded;
    • for academics, they are indirect costs. Investigators are classified as a DA cost, and charge-out rates are applied. These are based on the direct salaries (and on-costs) of staff, and incorporate assumptions about the working year and the time spent on direct Research activity. These do not include payments or time for any maternity, paternity or sick leave. The costs of these have been built into the indirect cost rates (part of the Support time and cost). Therefore, if incurred for a PI on a particular project, those costs should be allocated to Support in the annual TRAC process and should not be recorded as a direct project cost in TRAC fEC.
  3. DA and indirect costs can be recorded on original estimate. This provides a relatively simple method of recording the fEC of each project each year.
  4. Changes to indirect cost rates, or charge-out rates, or the level of resources being charged as DA costs, need not be recorded against the project cost record.
  5. If institutions wish, they can amend their DA and indirect cost charges to reflect more up-to-date rates, or indices, or perhaps actual estates utilisation, for example. However, any recorded increase in DA and indirect costs (from the original indexed estimates) will not lead to additional funding by most sponsors.
  6. For example, changes in the Research Assistant staffing could theoretically lead to different levels of PI, estates and indirect costs. If two RAs are budgeted (i.e. estimated in the bid), one leaves early, and then two new appointments are made, funders such as the Research Councils would not recognise any differences in the PI, estates or indirect cost totals charged to the project from those originally estimated.
  7. However, any decrease in DA and indirect costs recorded or reported against a project may lead to a lower funding, as public bodies have an obligation to ensure that their funds are being used for the purpose originally agreed.
  8. Most fEC-based funders will only change their price where there is a substantial change to the programme of work (e.g. departure of a key member of staff early in the project; serious curtailment of the work; or significant change to the type of work being undertaken). Except in these instances, there is no requirement under TRAC to change DA or indirect cost estimates during the project life.
  9. Where a project transfers to another institution, it is good practice for the recipient institution to recalculate the costs on the project. However, this would only be done if the difference is likely to be significant, and if the institution has systems that allow them to make this calculation efficiently. Changes to funding are not likely to follow – see for example Research Councils’ policies, given on their website, accessible from document link Annex 1.
  10. Rolling programmes more than three years in length are generally subject to a mid-term scientific review, at which time they may be extended. In these cases, the costs estimates (and prices) should be reviewed at this time.
  11. The estimates being recorded each year should be updated for the relevant price level. This can be based on the original phasing of estimates at project approval stage and the original indices.
  12. Entries should be made in project cost records once the work has started. For DI costs this will be when they start to be incurred. For DA and indirect costs this could be when the DI costs start to be incurred, when the investigator starts work, or when the sponsor recognises these costs for funding. It may be easier for institutions to use the latter, so that their costing and invoicing/income receivable systems are compatible.
  13. The Research Councils, for example, allow expenditure to be incurred prior to the start of the research, and subsequently charged to the grant, provided it does not precede the date of the award letter. Payments, however, take effect from the notified start date (shown on the starting certificate) or, if staff are being appointed, from the date when the first such staff start work.
  14. The recording fields, and periods, should be those that are most useful to the institution for managing the projects, charging sponsors, recording debtors, and making reconciliations at year-end and project-end. Quarterly or monthly records may be appropriate; but records should be made on a regular basis.

Reporting costs

  1. Project fEC-based costs will be reported:
    • to sponsors, in accordance with their requirements – the Research Councils, for example, require an Expenditure Statement at the end of a research grant;
    • as part of the external QA arrangements – the records required for this are described under verification, below;
    • possibly, at an aggregated level, to HESA FSR – see document link Annex 1.
  2. The categories of costs currently reported as the direct costs of research to the Higher Education Statistics Agency (HESA) in the Finance Statistics Return (FSR) are not being changed, for the time being. In this context note:
    • direct costs as currently defined would be reported (covering RAs, consumables, etc.), but neither estates charges nor PI salaries would be reported as direct costs of Research for the purposes of this return;
    • the FSR is based on the financial statements, which do not include the TRAC cost adjustments. Direct costs will, anyway, only be partially funded by the Research Councils. There may be issues of confidentiality. HESA definitions are likely to need reviewing as a result of TRAC;
    • research income on cost-based projects such as for the Research Councils may currently be defined for HESA with reference to costs. In this case a simple x% of recorded fEC could be used to establish Research Council income.
  3. Project cost records (maintained during the life of each project) might also be required to meet the needs arising from:
    • resource allocation (perhaps to identify the income from projects that academics are entitled to spend);
    • the identification of income receivable/income received in advance;
    • the requirement to compare charges made to Research Council projects in any one year for academics’ costs (through the standard charges recorded on project cost records), with the costs of the time they have actually spent (through the annual TRAC time allocation process);
    • other information (e.g. confirming whether the total level of directly allocated charges made during a year for an area of cost, such as a research facility, have been set at a level that appropriately ensures the recovery of those costs).
  4. However, project cost records are not required for the preparation of financial statements.

Verifying costs

  1. The costs estimated on projects should be verified, to ensure that they were actually incurred.
  2. Verification can be done by either:
    • recording actual costs as incurred; or
    • recording costs on estimate, and then matching these with the original rate calculations.
  3. Unless otherwise specified below, the required records should be kept at project level on systems that (a) provide an audit trail; and (b) allow aggregation of the entries in each field (time or cost category) each year. The total cost should be recorded in all cases (not any lesser total that forms the price for a particular sponsor).
  4. Directly incurred costs, such as RAs, dedicated technicians and other staff, consumables, travel and subsistence, and purchases of equipment for a project, should be recorded as expenditure is made, according to current practice.
  5. Directly allocated costs, such as pool/shared technicians, major research facilities, and estates, should be charged against the project, on a periodic basis (at least annually) according to estimated usage (by way of regular recharge journal or similar). The original records of estimated usage for Research, and calculation of the rates being applied, should be available for audit on an appropriate project file (but this could be paper- or electronic-based).
  6. The costs of PIs, fellows and co-investigators, as originally estimated and finalised during the project application process, should be recorded against the project periodically, not less than once a year. Again, appropriate records of the time originally estimated, and the pay bandings applied, should be available for audit on an appropriate project file (but the time estimated need not be in a form that could be aggregated for all projects, although this would be good practice).
  7. Indirect costs should be periodically recorded on initial estimate, not less than once a year. Appropriate records of the time and rates used to calculate the indirect cost totals should be kept for audit, but this could be a paper- or electronic-based file.
  8. Each year, or as required for project management purposes, the Principal Investigator should be able to confirm (or otherwise) that, broadly, the amount of time estimated at the start of the project is likely to have been spent, and will be spent, by the staff on the project. Broadly, in this context, means cumulative over the project so far, with reasonable assumptions as to future work on the project, and plus or minus 20%.
  9. The PI should be in a position to confirm this; the institution or head of department need not take responsibility, unless the institution so wishes. The PI need not keep formal records – but sponsors’ ‘dipstick’ style visits might need to see some evidence of time spent, e.g. paper-based diary entries, records of meetings, volume/quality of outputs, laboratory notes, conflicts of time flagged with head of department or supervisor, and so on. This does not imply the need for any timesheets, but it would be good practice in project management to keep a simple record (e.g. in a desk diary) of the significant inputs made to the project. The events, rather than time, are all that might be recorded in this. See document link Annex 1 – Research Council website – for more information on Research Council dipstick testing.
  10. The records therefore required under TRAC are no more than the desk diaries, laboratory notebooks and other mechanisms that staff already use to manage their time and their projects.
  11. Timesheets or other records of actual academic staff time by project should not be maintained to meet TRAC requirements. They are not required under TRAC. However, if a research unit does decide to complete partial or full timesheets (perhaps to satisfy EU or commercial requirements; or to overcome problems of robustness if there is little Research activity), then institutions should ensure that those processes, including the definitions of hours and costs/hour, are broadly compatible with the processes institutions are introducing more widely, both for project costing under TRAC and for the annual TRAC cost allocation exercise.
  12. Exceptionally, the Research Councils may require special project management procedures on very large projects, as currently (e.g. ESRC centres). This might continue to involve a particular type of time-recording (such as timesheets).
  13. Every year, from 2009, the institutions should compare the total academic costs attributed to the Research Council sponsor group in the annual TRAC time allocation exercise, with the total academic staff costs charged to Research Council projects in the accounting records - see reconciliation.