Towards Full Costing in European Universities

Transcription

1 Thomas Estermann Senior Programme Manager European University Association Prague

2 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 2

3 European Universities and the Challenges of funding Established in 2001 Brief Profile of EUA 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 3

4 The project s aims Provide evidence to debate on universities financial sustainability through analysis of institutional data and funding patterns from institutional perspective 1 st step: Identification of costs of activities and projects 2 nd step: Diversified funding structure Analyse universities progress towards full costing Provide examples of good practice Raise awareness among funders & universities 4

5 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 5

6 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 6

7 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 7

8 4. Drivers 8

9 5. Benefits HEIs National level European level 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 Better accountability => mutual trust => helps transition towards enhanced autonomy Stronger/more competitive universities = Stronger ERA & EHEA Enhanced accountability + trust with European Commission = simpler/less costly procedures 9

10 6. Obstacles to implementation of full costing Institutional obstacles External obstacles Resistance towards change Resistance towards managerial approach Concerns over time accounting Lack of leadership commitment 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 10

11 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 11

12 7. The role of external support 12

13 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 13

14 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 14

15 Recommendations Towards Full Costing Universities National Europe 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 Provide financial, technical, advisory and Human Resource support in implementing costing systems Grant universities the necessary autonomy Recognise the diversity of development of full costing Simplify the rules for both FP7 and future European funding schemes and apply simplified rules Europe and national Work towards coherent conditions for external funding requirements Move towards funding on a full cost basis 15

16 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 16

17 Thank you for your attention For further information : thomas.estermann@eua.be 17