2010 Finance Forum

1. 2010 Finance Forum 8 July 2010 Innovation Lecture Theatre

2. Agenda

3. Welcome and Significant Current Issues David Sturgiss

4. Transparent Cost of Research Peter Shipp

5. Background • First considered by the ANU in June 2008 • Participated in work undertaken by Allen Consulting Group in 2008 and 2009 on behalf of DIISR • Based on approaches identified under the UK Model to a degree • DIISR were seeking to identify an approach that could substantiate university claims regarding the indirect cost of research and a model to assist in driving a funding model within the Sustainable Research Excellence (SRE) context

6. Background • SRE focus to support research excellence and secure longer term sustainability of quality research • SRE providing $510 million over 4 years 2009/10 to 2012/13 to : • Support indirect costs associated with Australian Competitive Grant Research (ACGR) • Increase transparency and accountability

7. Background • 2010 a trial year for Transparent Costing exercise • Universities to provide: • Results of a ‘Staff time spent on ACG Research’ survey (Staff Time Survey) • Report on the University’s Indirect Costs (IDC) • Option of a Preferred and/or Alternate method of calculation given by DIISR

8. Promising Start • Open minded approach by DIISR in the development of a TC model • Option of 2 models to determine TC • Preferred and Alternate • Alternate model from high level data and all universities should be able to undertake • No disadvantage provision for those adopting the Preferred model if this resulted in a lower number

9. Promising Start • Use of a Trial Year approach to enable development of the model • TC outcomes used as a moderator NOT a determinator in the funding model • Not a true ABC model • Implementation funding for those participating in SRE and TC exercise

10. DIISR Methodology • Identify from Staff Time Survey the amount of time dedicated to ACG research as a proportion of Total Academic effort (Alternate method) or as a proportion of Total Research effort (Preferred method). Academic staff surveyed to determine time spent on: • Research ACG • Research Other • Teaching • Research Training • Other (includes grant application and preparation) • Leave

11. DIISR Methodology • Determine ‘Allowable Indirect Costs of Research’ – Preferred Method • Non academic salaries and on-costs related to supporting research activities • Maintenance of physical infrastructure used for research including most IT • Finance and Insurance costs related to research activities • Other costs indirectly associated with research

12. DIISR Methodology • Determine ‘Allowable Indirect Costs’ – Alternate Method • Identify all indirect costs associated with research and teaching which are all costs of operations EXCEPT • Academic salaries and on-costs • Depreciation • Borrowing costs • Commercial activity related costs • E-research/high performance computing costs • Joint venture and controlled entity costs • Costs of acquiring research animals

13. Alternate Method Approach • The simplest of the two methods • Requires: • Outcome from Staff Time Survey • Identification of ‘Allowable Indirect Cost’ at high level • Risk is that it is less accurate than the results from the Preferred Method • Predicated on the assumption that the non-research indirect costs are similar to those for research

14. Preferred Method Approach • Requires recognition of the following allowable: • Indirect costs at the local research Business Unit level • Indirect costs at the College or Central level • Once the College/Central allowable non-local Indirect costs are identified they are to be reallocated to the research area on a relevant Cost Allocation Proxy (CAP) • The Indirect Cost at local research Business Unit + College/Central costs reallocated to research Business Unit = Indirect Cost of Research • The costs MUST be related to research activity

15. ANU Approach • ANU approach will not be applicable to ALL universities • Following principles should however be adaptable to most universities • Always view as a work in progress • Our operational structure and physical layout only allows us to adopt a ‘predominance use’ approach.

16. ANU Approach • Established a system generated report to identify contribution to P&L result by each Fund type* • Report can be run at whole-of-University or College or Business Unit level • Can be reconciled back to P&L values • * Fund types R = Recurrent; S = Contract Research; Q = Consultancy; Other = Trading Areas, Endowment, and Investment returns etc.

17. ANU Approach

18. ANU Approach • Direct costs • Direct Costs funded by Projects PLUS Direct Costs that are met from University operational budgets e.g. Chief Investigator Salary and possibly other expenses of this nature • For the purpose of this exercise we have not identified these salaries as Direct Cost nor apportioned them in the allocation of Business Unit Indirect Costs (as they are excluded under DIISR Guidelines)

19. ANU Approach • Indirect Costs • Generally recognised as operational expenses recorded in the R Fund of the relevant Business Unit (Research School or Centre in this case) • Exceptions to the above are: • Academic Salaries • Depreciation

20. ANU Approach • Overhead Cost recognition • Generally located in the Recurrent Fund expenses associated with: • College General operations (primarily administration of the College or in some cases area in which utility charges are held if not distributed to Business Units of the College) • Central University Administration operations • To determine overhead costs related to Research ANU’s CAPS are applied to redistribute these costs to Teaching and Research Business Units

21. ANU Approach • Overhead Cost recognition (cont’d) - College • College General Business Unit generally contains costs associated with administration and in some cases some other costs that the College does not distribute to Business Units. • Total College expenses allocated to Business Units (BU) of the College based on the ANU CAP • BU AFS Income/Total College AFS Income

22. ANU Approach • Overhead Cost recognition (cont’d) – Central Admin • The following Central Admin Areas Costs have been redistributed • Based on ANU CAP: Current Replacement Value BU Buildings/Total Current Replacement Value of Teaching & Research Buildings • Building Maintenance • Campus Wide Property Costs • Facilities and Services Division

23. ANU Approach • Overhead Cost recognition (cont’d) – Central Admin • Based on ANU CAP: BU AFS Income/Total Teaching & Research BU AFS Income • University Executive • Finance & Business Services • General University Activities • Marketing and Communications • Statistical Services • Development Office

24. ANU Approach • Overhead Cost recognition (cont’d) – Central Admin • Based on ANU CAP: BU Student EFTSL/Total Teaching & Research BU Student EFTSL • Division of Registrar and Student Services

25. ANU Approach • Overhead Cost recognition (cont’d) – Central Admin • Based on ANU CAP: BU Average of(Staff FTE + Student EFTSL)/Total Teaching & Research BU (Staff FTE + Student EFTSL) • Information Services (IT) • Based on ANU CAP BU Raw Staff Numbers/Teaching & Research Raw Staff Numbers • Human Resources Division

26. ANU Approach • Overhead Cost recognition (cont’d) – Central Admin • Based on ANU CAP BU Number of S Accounts Held 31 Dec/ Total Teaching & Research BU S Accounts Held 31 Dec • Research Office

27. Issues to be resolved in the future • How to address direct cost of academic salaries covered by universities not recognised as direct or indirect costs in the TC exercise • How to reflect depreciation • Current DIISR approach is that only function of universities is Teaching & Research – impact of this on redistributing College/Central costs where central costs associated with servicing non-eligible operations not recognised (eg commercial activities)

28. Issues to be resolved in the future • Need for us to be more definitive in what is a Research and Teaching Department and associated costs to be recognised at that level • Move towards an ABC model methodology in the future • Determine cost drivers • Understand true cost of Research and Teaching deliverables • Look to identify costs associated with BOTH Research and Teaching

29. Issues to be resolved in the future • Significant system and administrative practice changes likely to arise and need to be managed • Significant cost in both time and dollars will be involved in moving down this path and will require buy-in from university executive • The work, fun, and challenges for us in identifying the real cost of Research and Teaching in our universities begins!!!

30. Useful Links • http://www.innovation.gov.au/Section/Research/Documents/IndirectCostsUniResearch.pdf • http://www.innovation.gov.au/Section/Research/Documents/FAQsSREFinance100610.pdf • http://www.innovation.gov.au/Section/Research/Documents/GuidelinesForTheAssignmentOfTheIndirectCosts100610.pdf • http://www.innovation.gov.au/Section/Research/Documents/SRE2010GuidancePaper.pdf

31. Useful Links • http://www.rcuk.ac.uk/cmsweb/downloads/rcuk/reviews/fec/fecexecsum.pdf • http://www.rcuk.ac.uk/cmsweb/downloads/rcuk/reviews/fec/fecreport.pdf • http://www.rcuk.ac.uk/cmsweb/downloads/rcuk/reviews/fec/fecannex.pdf • http://www.rcuk.ac.uk/cmsweb/downloads/rcuk/documents/qavreport.pdf • RCUK website

32. Happy to take Questions

33. HERDC Update Lorraine Piper

34. SPECIAL PURPOSE FUNDS • HERDC • Financial return submitted successfully 30 June • Increase of $2.6M over 2008 return • New & improved method of preparing return well received – further feedback will be sought prior to the preparation of the 2010 return

35. 30 June Statements • List of 122 statements due for preparation as at 30 June distributed to College Finance officers on Friday 2/7 • 18 require internal audit • 8 require external audit • Documentation to be returned to SPF by Wed 21/7 (at latest) to ensure timely conduct of audits

36. FBT Return Review Callum Burke

39. Meal Entertainment • Overall increase in taxable value of approximately $75,000. • Currently working strategies to reduce future FBT on ME. • Business areas need to encourage staff to reduce expenditure on ME. • FBT cost should be considered before ME takes place.

40. Motor Vehicles • Increased taxable value of approximately $19,000. • Make the most of exempt vehicles. • Reduce home garaging of non-exempt vehicles. • Reduce personal use. • Statutory percentages, Increased KM’s does unfortunately reduce FBT cost.

41. 2009-10 FBT Return • FBT packs received from Colleges • Overall very high quality • Declarations • Individual area reports • Sent out in June for review • Reconciliation • Currently working on making adjustments for ‘actual FBT amounts’ v ‘System generated amounts’

42. Salary Sacrificing of iPads (e-readers) • ATO has confirmed that iPads can be defined as laptops or PDAs (section 58X(2) FBTAA). • However to be exempt and therefore effective under a salary packaging arrangement: • The device must have been acquired for the primary purpose of use in your actual employment duties, and • You must not have salary packaged any similar items earlier in the relevant FBT year. • iPad is marketed primarily as an entertainment making it much harder to justify the primary purpose is for work. • Result = No iPads under salary packaging arrangements at this stage.

43. Vendor Record Management Wendy Fox

44. Vendor Record Management • Vendor request job logging in DOI Helpdesk • Email to vendor.maintenance@anu.edu.au with supporting documentation • Follow-up directly in DOI Helpdesk • Email from DOI Helpdesk when vendor approved • Revised Web documentation: • POI – Get Employee/Student, default to cheque • 21 day payment terms default • Vendor reactivate – email vendor.maintenance@anu.edu.au with supporting documentation

45. Report Distribution Tool Ben Lees and Eric Li

46. Introduction • Approximately 10,000 nVision reports produced each Period End • Significant time spent by Finance staff distributing reports to the right recipients • College of Science developed an email based distribution tool

47. Key Features • Distributes reports via Microsoft Outlook • Distribution template • Maintain recipient/report relationships • Map new reports at period end • Filtering by report id/recipient • Logs distribution history • Displays reports not yet distributed • Allows for adhoc usage • Multiple reports per recipient

48. Requirements • Microsoft Windows platform • 2003 or 2007 Microsoft Excel and Outlook

49. Demonstration

50. Run Report Book within ES Financials, zip them, and unzip to your local machine.