Frequently asked questions

  • How do I complete Table A1 of the Annual TRAC return from the financial statements?

    The Annual TRAC return includes total income and total expenditure lines derived from the totals included in the institution’s Consolidated Statement of Comprehensive Income, adjusted, where appropriate, in respect of pension costs, gains or losses on disposal of fixed assets, gains or losses on investments, the share of surpluses/deficits in joint ventures and associates, taxation charges or credits and non-controlling interests (in line with section of the TRAC guidance).

    The total income figure reported in the Annual TRAC return should reconcile to the consolidated financial statements as follows (with relevant reference to the TRAC guidance):

    • total income as reported in the consolidated financial statements
    • plus gain on disposal of fixed assets (
    • plus gain on investments (
    • plus the share of operating surpluses in joint ventures and associates as reported in the consolidated financial statements (
    • plus taxation credits (

    The total expenditure figure reported in the Annual TRAC return should reconcile to the consolidated financial statements as follows (with relevant reference to the TRAC guidance):

    • total expenditure as reported in the consolidated financial statements
    • minus costs or plus credits attributable to the deficit recovery plan for certain multi-employer pension schemes (
    • plus loss on disposal of fixed assets (
    • plus loss on investments (
    • plus the share of operating deficits in joint ventures and associates as reported in the consolidated financial statements (
    • plus taxation charges (

    A worked example indicating the likely sources of information for completing Table A1 of the TRAC return from the financial statements is provided below.

    Annual TRAC return – Table A1 worked example

  • When UKRI undertakes a review of the TRAC process, what are the requirements against which our systems will be assessed?

    The UK Research and Innovation (UKRI) Funding Assurance Programme (FAP) provides assurance on the regularity of expenditure to the UKRI Accounting Officer. Information about the FAP process can be obtained from the UKRI website, or by contacting UKRI directly.

    UKRI will inform institutions how they will review TRAC systems in advance of each visit, and are likely to consider institutional self-assessment when designing their assurance programme.

    The TRAC requirements that were included in the TRAC guidance for the year being reviewed are the requirements that an institution’s level of compliance will be reviewed against (summarised in the TRAC Statement of Requirements document for ease of reference).

    The TRAC Development Group (TDG) has undertaken work to identify the more common areas where institutions may fall out of compliance with the TRAC requirements. To assist institutions in checking on their compliance, Annex 2.1b ‘TRAC assurance reminders checklist’ has been added to the TRAC guidance. This is a useful reference source of common issues for TRAC Practitioners when reviewing their own systems. It also contains a consolidation of the ‘What could go wrong’ sections of the TRAC Guidance. In addition, TDG has produced a good practice guide ‘An assurance framework for TRAC’ which is strongly supported  Gareth MacDonald, UKRI Head of Assurance.

  • How should Research and Development Expenditure Credits (RDEC) be treated in TRAC?

    A number of institutions have made RDEC claims. These are claims for a tax credit on eligible (not all) research expenditure. So financial statements for the year ending 31 July 2018 could contain income in respect of RDEC, and this income will be reflected in TRAC. This is a short-term benefit that is not expected to recur.

    RDEC income, although not a long-term source of income, is indeed income for institutions and therefore it is right to be included as income within TRAC. In the financial statements, RDEC is accounted for in two places – income, and taxation. There is a gross income figure in income, but this is subject to a tax charge, which appears on the taxation line. Therefore the net income to the institution is RDEC income, less taxation on that income.

    The Higher Education Statistics Agency (HESA) has included an additional column in table 5 to separate out the RDEC income which appears as income in the financial statements. The TRAC income allocation table (Annex 3.5a of the TRAC Guidance) reflects this, and allocates this income to ‘Other UK Government Departments’ in the Research sponsor-type analysis of the TRAC return.

    Given how RDEC income was accounted for in 2014-15, it was agreed that it was more appropriate for TRAC to report the ‘Net RDEC income’ figure (gross RDEC income less the taxation charge on this income). Following the review of TRAC guidance for FRS 102, all tax charges are now included in TRAC expenditure. Therefore, for 2016-17, RDEC income should be included gross within TRAC income (see section and of the TRAC Guidance v2.2).

  • How will the calculation of research income when considering eligibility to claim dispensation take into account the effect of volatility in research income resulting from the implementation of Financial Reporting Standard 102 (FRS 102)?

    The impact of FRS102 affects research income that is received for revenue and capital purposes, and there will be variation according to whether the accrual or performance model has been selected as the accounting policy for government grants.

    As the assessment of publicly funded research for dispensation purposes is an average taken over a five-year period, it is not expected that the impact of FRS102 will be material. Capital grants do, however, have the potential to distort the calculation of eligibility for dispensation.

  • How should pension costs be treated in TRAC?

    Pensions are by nature technical, and can be complex to understand. It is therefore necessary to consider the detail in order to understand how the accounting approaches differ for different schemes. The schemes used by universities are not all treated the same way in the Transparent Approach to Costing (TRAC).

    The purpose of this briefing note is to provide TRAC practitioners and members of higher education (HE) providers’ internal TRAC oversight groups with background information and understanding on the accounting treatment of the different pension schemes that are used by universities in the UK.

    View the pensions briefing note