Transparent Approach to Costing (TRAC)

TRAC is an Activity-Based Costing system which seeks to identify the full cost of key activities in Higher Education Institutions (HEIs). Activities are analysed into “Teaching”, “Research” and “Other” (commercial activities, residences etc.). Teaching is further analysed into publicly funded and non-publicly funded and Research according to the main sponsor types. TRAC calculates the full cost of an institution’s activities by taking the income and expenditure from the annual published accounts and adjusting for two sustainability factors. The first adjusts the depreciation charge on buildings to an insurance-based replacement value to better reflect the full cost of maintaining the current infrastructure. The second sustainability adjustment covers the surpluses required for rationalisation, updating and development of future productive capacity. This data is submitted annually to HEFCE in a return (TRAC return) and is used for the cost-based pricing of research projects (full economic costing – fEC) for the Research Councils and other public funders of research. Further analysis of the teaching costs are submitted in a separate return (TRAC (T)). There are two different schools of thought across the sector concerning the usefulness of TRAC – some consider it to be bureaucracy, others an under-utilised tool. The new Guidance discussed below does not alter TRAC fundamentally and so is unlikely to sway opinion either way.