AUDIT APPROACH
TRANSPARENT APPROACH TO COSTING RETURNS
RESEARCH & CONSULTANCY APPLICATIONS
Colin Decker
Audit Manager
Cardiff University
Swansea University
email : c.decker@cardiff.ac.uk
TRANSPARENT APPROACH TO COSTING
ANNUAL RETURNS
What are the audit objectives ?
1
Approved strategy is in place.
2
Implementation monitored at a corporate level.
3
Appropriate School data capture mechanisms in place to
distinguish costs incurred between Teaching, Research and
Other.
4
Financial reports and statistical returns are produced from
accurate and authentic financial data.
5
Research and other projects are costed in accordance with
TRAC/fEC cost principles.
6
Risks have been duly assessed and are effectively managed.
1 Approved strategy is in place.
Risk / Control Issue
There is no clear strategy for the implementation of TRAC / fEC.
Expected Controls
 A strategy / policy has been documented and has been approved by
Committee / Council.
 The strategy / policy is supported by procedures for implementation.
Risk / Control Issue
Requirements and responsibilities have not been communicated to
University personnel.
Expected Controls
 The requirements of and responsibilities for the Transparency Review
have been defined and clearly communicated to all Heads of Schools and
Directorates.
Risk / Control Issue
Undue reliance for implementation is placed on one or
two key individuals
Expected Controls
 A working group has been established to monitor the application of the
TRAC / fEC costing principles to research projects, services rendered
contracts and PF / non PF short courses.
 The adequacy of cover for key persons involved with implementation has
been fully assessed and appropriate action taken
2 Implementation monitored at a
corporate level
Risk / Control Issue
The University has not established a monitoring mechanism to oversee
the successful implementation of the Transparency Review.
Expected Controls
 Council and Committee receive reports on progress of implementation.
 A Working Group has been established.
Risk / Control Issue
The University’s approach to TRAC does not comply with the TRAC
requirements, as stated in TRAC Guideline Volume II.
Expected Controls
The Working Group has received assurance that all of the requirements
(listed in TRAC Volume IIA) have been complied with. [Ref:Page C.1 7]
3
Appropriate data capture mechanisms
Risk / Control Issue
There are no data capture procedures to obtain accurate costing
Information on Teaching, Research and Other.
Expected Controls
 Time allocation schedule response rates are monitored.
 Academic staff statistics are accurate and are analysed by job class.
 Research Postgraduates statistics are accurate and are analysed
between laboratory and non-laboratory (generic) Schools.
 A minimum of six costs drivers have been identified.
 The models for direct estates and indirect costs are clearly explained.
4 Financial reports and statistical returns are
produced from accurate and authentic
financial data.
Risk / Control Issue
Financial data is unreliable.
Expected Controls
 All internal and external cost reports are adequately supported.
 There are appropriate reconciliations of cost and income analysis totals to
financial account control totals to ensure completeness of financial data
 Procedures for cost and income data capture are flexible to ensure that future
requirements can be met
5
Research and other projects are costed
and priced in accordance with TRAC/fEC
cost principles.
Risk / Control Issue
The TRAC / fEC cost principles are not applied in practice.
Expected Controls
 TRAC / fEC cost and pricing principles should be applied to :
- research council funded projects
- other research projects
- services rendered contracts
- publicly and non publicly funded short courses
 Formal justification and approval is required where pricing does not recover
the full economic costs.
 Non-recovered costs are monitored centrally by a designated officer and
reported to Committee.
6 Risks have been duly assessed and are
effectively managed.
Risk / Control Issue
Risk have not been assessed.
Expected Controls
•
Risk are assessed annually for continued applicability.
Risk / Control Issue
Assessed risks have not been managed.
Expected Controls
• Defined risks are managed effectively to reduce possibility of occurrence, or
to minimise their impact.
RESEARCH & CONSULTANCY
APPLICATIONS
What are the audit objectives ?
1 The policy and related procedures for applying for a research
project have been documented.
2 A standard cost application template has been developed.
3 Assumptions for project estimates are documented.
4 There is evidence that the research application complies with the
School Business Plan, University research strategy and ethics.
5 Risks have been duly assessed and are effectively managed.
Policy and Related Procedures
Risk / Control Issue
There is no clear guidance for making research applications.
Expected Controls
• A strategy / policy has been documented and received approval
by Committee / Council.
• The strategy / policy is supported by procedures for
implementation, and the timing of establishing a separate nominal
ledger accounts code if the application is approved
Risk / Control Issue
Requirements and responsibilities have not been
communicated to University personnel
Expected Controls
• The requirements of and responsibilities for the applying for
research projects have been defined and clearly communicated to
all Heads of Schools and Principal Investigators.
• Suitable training courses have been developed on research project
applications for Principal Investigators and Support Service Staff
A standard cost application template has
been developed
Risk / Control Issue
No guidance is provided to Principal Investigators for producing cost estimates as part of the
research project applications process.
Expected Controls
 A research application costing template has been developed which analyses :
•
•
Directly incurred costs
- researcher salary costs - names, time (hours)
- PGR salary costs - names, time (hours)
- technical / clerical salary costs
- direct non-staff costs, excluding Estates costs.
Directly allocated costs
- PI/Co-investigators – names, time (hours)
- charges for laboratory technicians
- directly allocated Estates costs (including infrastructure adjustment)
- equipment
Indirect costs
including ‘cost of capital employed’ (COCE) adjustment calculated for PI/researcher and PGR FTEs.
•
Exceptional items

A contact helpline has been established to provide practical assistance to Principal Investigators.
Assumptions for project estimates are
documented
Risk / Control Issue
There is little or no evidence to support cost estimates made in
research project applications
Expected Controls
• Guidelines provided to Principal Investigators require that all cost estimates
used in research applications are documented and that assumptions used
are clearly defined.
•
The cost assumptions made in the application should be clearly defined, to
cover
- all staff (names, grade, estimate of hours to be spent,
- either gross salaries including employer overheads, or pay banding costs
dependant on policy to be adopted
• all equipment, ie
- specialised equipment required
- other equipment together with previous funding source (eg has
research council already paid for equipment to be used on current
project)
- use of research facility equipment charge out rates - computing
costs (where these are not included in indirect costs). All anticipated
consumables have been included in the project cost application.
• There are checks in place to ensure that the research project
application cost estimates do not include double accounting.
Application complies with the School
Business Plan, University research strategy
and ethics
Risk / Control Issue
There is no confirmation that the research application complies with School or
University strategy.
Expected Controls
•
Research project applications should be approved by the Head of School.
Applications should confirm compliance with School strategy and ethical guidelines.
•
The pricing of the project should seek to recover the cost estimates.
Shortfalls should be justified, identifying other funding source.
•
RACD should monitor the project application for :
- compliance with University strategy and research ethical guidance.
- proper completion of the standard research cost estimate template.
•
This should be evidenced by an approved signatory of RACD.
•
RACD should negotiate the research project price with the sponsor, following best
practice as advised by the Joint Costing and Pricing Steering Group (JCPSG) ie the
Lambert model agreements for collaborative research (as appropriate).
Risks have been duly assessed and are
effectively managed
Risk / Control Issue
Risks have not been assessed.
Expected Controls
•
•
There is central guidance on applying risk assessment techniques to research
projects.
The risks relating to the proposed research project have been assessed.
Risk / Control Issue
Assessed risks have not been managed.
Expected Controls
•
The processes by which the assessed risks are to be managed have been defined.
•
The risk assessment is completed before the application is signed off by the Head of
the related School.