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18 May 2004 HEFCE logo
To  Heads of HEFCE-funded higher education institutions
Heads of universities in Northern Ireland
Direct Line 0117 931 7300
Direct Fax 0117 931 7203

Circular letter number 10/2004

For further information contact Andrew Beazer, tel 0117 931 7113, e-mail a.beazer@hefce.ac.uk

Dear Vice-Chancellor or Principal

Transparency Review data reported for 2002-03

1.    I am writing to report on progress made by institutions in implementing robust and comprehensive systems for costing their activities, following the Transparency Review. No action is required in response.

2.    We have received data on costs for 2002-03 from all universities and colleges in this fourth round of reporting for the whole sector. This has met the Government's target, and we congratulate the sector on this achievement. Nevertheless, the sector will need to continue to develop and refine its costing systems and related assurance processes to ensure that it can confirm full compliance with Transparency Review requirements by the academic year 2003-04 (see the review process below).

3.    The Transparency Review data include two major adjustments to the expenditure values reported in institutions' audited financial statements. These adjustments provide an estimate of the full economic costs of institutions' activities. In 2002-03 the value of these adjustments was 8.2 per cent, or £1,023 million, reflecting the extent to which full economic costs exceeded actual recurrent expenditure in that year.

4.    Annex A presents overall data on costs for 2002-03 in the sector, and shows results for HEIs in both England and the whole of the UK. Previous years' data are provided for comparison. Further information on the Transparency Review and the transparent approach to costing is available on the web-site of the Joint Costing and Pricing Steering Group (www.jcpsg.ac.uk).

5.    Following a review of financial reporting and activity costing, work is now taking place in the following areas:

  1. Work is under way on expanding the annual Transparency Review reporting return to include both income and full costs across the five categories for TRAC reporting.

  2. The UK funding bodies and the Research Councils have established a review process which can provide independent assurance to a range of stakeholders on the robustness of the original TRAC implementation within HEIs. As part of this process a quality assurance team will aim to visit all UK institutions between April and December 2004 (see HEFCE Circular letter 05/2004).

  3. A study is due to start on the calculation of the economic adjustments applied to institutions' reported expenditure. It will focus on the infrastructure adjustment and cost of capital adjustment to refine and improve the methods by which these two adjustments are calculated. The study will also investigate whether there is a case for an infrastructure adjustment to apply to equipment.

6.    We are working on the basis that when this work is completed, findings will be reflected in institutions' future Transparency Review reporting.

Yours sincerely

 

Howard Newby
Chief Executive



Download

Annexes
Transparency Review: HEI reporting for 2002-03
[ MS Word 126K | Zipped Word 20K | Adobe PDF 28K | Zipped PDF 24K ]

 

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