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Frequently asked questions

General TRAC FAQ

Technical TRAC FAQs

These questions have been raised through the TRAC Helpdesk or at meetings of TRAC regional groups.


What is TRAC? When was it introduced?

The Transparent Approach to Costing (TRAC) is the methodology developed with the higher education sector to help them cost their activities. It is an activity-based costing system adapted to academic culture in a way which also meets the needs of the main public funders of higher education.

TRAC uses institutional expenditure information from published financial statements and ‘cost adjustments’ to provide the ‘full economic cost’ of activities. It therefore encompasses both the direct and indirect costs of activities and an adjustment to the historic expenditure to reflect the full, sustainable costs of the activities.

Since the introduction of Annual TRAC in 2000, the TRAC method has been developed to provide three further costing applications:

  • 'full economic costing' of research projects (TRAC fEC for costing research projects) - implemented from 2004-05 as part of the Government's reform of the dual support arrangements for public funding of research.
  • TRAC for Teaching (TRAC(T)) being used to cost the main fuding council funded teaching at subject level, with the main aim of informing the public funding of teaching (not implemented in Wales)
  • the TRAC-based Certificate of Methodology for EC Framework 7 (TRAC EC-FP7) - an optional method for costing projects funded by the European Commission

An explanation of the four TRAC applications can be found in the Appendix of TRAC: Policy overview (2009).

The data from TRAC provides institutions with key information that can help managers understand and manage sustainability issues.

The TRAC Development Group (TDG) is responsible for the TRAC methodology. TDG redeveloped the TRAC guidance to simplify and streamline the approach in 2014 and version 2.0 was issued in summer 2016.

A guide has been produced on TRAC for Senior Managers and Governing Body members. This provides useful background on TRAC and its role in informing the sustainable costs of the institution.

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When RCUK undertake a review of the TRAC process, what are the requirements against which our systems will be assessed?

The RCUK Funding Assurance Programme (FAP) provides assurance on the regularity of expenditure to the Chief Executives of each of the Research Councils. Information about the FAP process can be obtained from the RCUK website, or by contacting RCUK directly.

RCUK will inform institutions how they will review TRAC systems in advance of each visit, and are likely to consider institutional self-assessment when designing their assurance programme.

The TRAC requirements that were included in the TRAC guidance for the year being reviewed are the requirements that an institution’s level of compliance will be reviewed against (summarised in the TRAC Statement of Requirements document for ease of reference).

The TRAC Development Group (TDG) has undertaken work to identify the more common areas where institutions may fall out of compliance with the TRAC requirements. To assist institutions in checking on their compliance, Annex 2.1b ‘TRAC assurance reminders checklist’ has been added to the TRAC guidance. This is a useful reference source of common issues for TRAC Practitioners when reviewing their own systems. It also contains a consolidation of the ‘What could go wrong’ sections of the TRAC Guidance.

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How should Research and Development Expenditure Credits (RDEC) be treated in TRAC?

A number of institutions have made RDEC claims. These are claims for a tax credit on eligible (not all) research expenditure. So financial statements for the year ending 31 July 2017 could contain income in respect of RDEC, and this income will be reflected in TRAC. This is a short-term benefit that is not expected to recur.

RDEC income, although not a long-term source of income, is indeed income for institutions and therefore it is right to be included as income within TRAC. In the financial statements, RDEC is accounted for in two places – income, and taxation. There is a gross income figure in income, but this is subject to a tax charge, which appears on the taxation line. Therefore the net income to the institution is RDEC income, less taxation on that income.

The Higher Education Statistics Agency (HESA) has included an additional column in table 5 to separate out the RDEC income which appears as income in the financial statements. The TRAC income allocation table (Annex 3.5a of the TRAC Guidance) reflects this, and allocates this income to ‘Other UK Government Departments’ in the Research sponsor-type analysis of the TRAC return.

Given how RDEC income was accounted for in 2014-15, it was agreed that it was more appropriate for TRAC to report the ‘Net RDEC income’ figure (gross RDEC income less the taxation charge on this income). Following the review of TRAC guidance for FRS 102, all tax charges are now included in TRAC expenditure. Therefore, for 2016-17, RDEC income should be included gross within TRAC income (see section 3.1.5.4a and 3.3.5.2 of the TRAC Guidance v2.2).

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How will the calculation of research income when considering eligibility to claim dispensation take into account the effect of volatility in research income resulting from the implementation of Financial Reporting Standard 102 (FRS 102)?

The impact of FRS102 affects research income that is received for revenue and capital purposes, and there will be variation according to whether the accrual or performance model has been selected as the accounting policy for government grants.

As the assessment of publicly funded research for dispensation purposes is an average taken over a five-year period, it is not expected that the impact of FRS102 will be material. Capital grants do, however, have the potential to distort the calculation of eligibility for dispensation.

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Page last updated 9 November 2017