towards full costing in european universities · 1. terminology lack of a commonly understood...
TRANSCRIPT
Towards Full Costing
in European Universities
Thomas Estermann
Senior Programme Manager
European University Association
30.3.2009
Prague
Overview
EUA profile and Project basics
Selected key findings � Terminology
� Diversity
� Development of full costing
� Drivers
� Benefits
� Obstacles
� The role of external support
� The role of funding schemes
� Complexity
Recommendations to universities, national governments and European institutions
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Brief Profile of EUA
Established in 2001
Non-governmental membership organisation
800 individual university members
35 National Rectors’ Conferences Members
46 countries
Independent voice for the university sector
Focus on EHA and ERA
European Universities and the Challenges of funding
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The project’s aims
Provide evidence to debate on universities’financial sustainability through analysis of institutional data and funding patterns from institutional perspective
� 1st step: Identification of costs of activities and projects
� 2nd step: Diversified funding structure
Analyse universities’ progress towards full costing
Provide examples of good practice
Raise awareness among funders & universities
Towards Full Costing in European Universities
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1. Terminology
Lack of a commonly understood terminology in accounting and of financial terms in the Higher education sector in Europe
Diverging interpretation and adaptation influenced by:
� EU FPs
� Management accounting theory (ABC)
� TRAC in the UK
� National context
� Ability to define costs as direct, define cost objects and allocate them
Suggestion to use the term “full costing”
Towards Full Costing in European Universities
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2. Diversity
Legal status
Size
Profile
Ownership of property
Governance structure
Funding structure
Costing structure
Level of autonomy
� Impact on the development, design and implementation of full costing
� Analysis of these elements helps benchmarking and finding similar universities for exchange
Towards Full Costing in European Universities
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3. Development of full costing
Huge diversity in development both in countries and universities:� No implementation of full costing (PL, Estonia, SL)
� Development/implementation process started (SE, IE, FI, Austria)
� Full costing implemented (UK, NL)
=> All 3 stages comprise a broad spectrum
Partly conditional on � quality of different databases
� information systems
� types of costing models already existing
National coordinated initiatives & financial support from government = faster development
Towards Full Costing in European Universities
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4. Drivers
Towards Full Costing in European Universities
HEIs
� Improved strategic decision-making� Systematic approach to activity analysis and costing� Enhanced ability to negotiate and price activities => higher cost recovery
� More efficient internal resource allocation system� Benchmarking possibilities
National level
� Better accountability => mutual trust => helps transition towards enhanced autonomy
European level
� Stronger/more competitive universities = Stronger ERA & EHEA
� Enhanced accountability + trust with European Commission = simpler/less costly procedures
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5. Benefits
Towards Full Costing in European Universities
Institutional obstacles
Resistance towards change
Resistance towards managerial approach
Concerns over time accounting
Lack of leadership commitment
External obstacles
Lack of autonomy and other legal barriers
Lack of trust between stakeholders
Strain on financial, technical and human resources
Risk of complexity
Low cost culture/restricted markets and pricing
Competitive funding is not covering full costs
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6. Obstacles to implementation of full costing
Towards Full Costing in European Universities
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7. The role of external support
At different stages� Development
� Implementation
� Funding on a full cost basis
From different sources� Organisations representing universities (Rectors’ Conferences)
� National agencies responsible for the funding and/or organisation of universities
� International organisations and other external funding bodies
In different forms� Financial support
� Human resources
� Advisory/consulting activities
Towards Full Costing in European Universities
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7. The role of external support
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8. The role of funding schemes
Drivers but also potential obstacles to implementation of full costing
FP7: Forms for cost recovery and application of rules need to allow for wider scope of different methods and diversity
External funding only partly covers costs = endangers financial sustainability => potential reduced participation
Most universities not ready to identify all their costs = if reduced flat rate from 2010 => potential harm to EU’s R&D competitiveness
Towards Full Costing in European Universities
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9. Complexity
Multiple drivers add to the risk of making costing systems too complex
Diverse requirements of funders in competitive funding schemes
Risk that complex systems are imposed on other countries’ institutions
Risk of unduly complex reporting under “accountability” requirements
Existing systems need to be carefully evaluated
Towards Full Costing in European Universities
Universities
� Use costing system as an integrated strategic tool for planning and decision-making
� Understand complexity and multiple purposes of costing systems and take account of these factors in the design
National� Provide financial, technical, advisory and Human Resource support in implementing costing systems
� Grant universities the necessary autonomy
Europe
� Recognise the diversity of development of full costing� Simplify the rules for both FP7 and future European funding schemes and apply simplified rules
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Recommendations
Towards Full Costing in European Universities
Europe and national
� Work towards coherent conditions for external funding requirements
� Move towards funding on a full cost basis
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Discussion with European players to provide universities’ view
Take up activities to enhance development of full costing
Foster exchange of best practice
EUDIS – Diversifying income
streams
Next steps
Towards Full Costing in European Universities