Entitled “Financially Sustainable Universities. Full Costing: Progress and Practice”, the publication aims to assist university practitioners in implementing full costing, with examples of good practice, whilst at the same time providing important information for policy makers and funders, in particular for the current debate on Horizon 2020.

Full costing – the ability to identify and calculate all the direct and indirect costs of an activity – has been identified as a crucial element for universities’ financial sustainability. It has become increasingly important as a result of the financial challenges that many universities currently face: reduced public funding (in many European countries); changes to the way funding is allocated (e.g. performance based elements); increasing use of ‘co-funding’ requirements; and the management of diverse income sources.

The publication provides an update on the status of the implementation of full costing in 14 European higher education systems and examines its impact on the relationship between universities and different funders. It shows that funding rules are an important driver for full costing development. In 10 out of the 14 systems analysed the possibility to recover costs based on a full costing methodology under FP7 have been an important driver for development.

Full costing methodologies help universities to identify the full costs of their activities and provide information for evidence-based decision-making at the strategic level of the university. It also enables them to show in a transparent way how they spend money and what the real costs of their activities are. It supports, therefore, accountability in relation to funders and provides information to enhance understanding of the adequate level of funding needed in a system.

The report, which brings together evidence collected during a major EUA project supported by FP7 (European Universities Implementing their Modernisation Agenda – EUIMA) and from other EUA work on funding concludes that, overall, considerable progress has been made in recent years in the implementation of full costing. EUA’s work has shown that nevertheless a number of obstacles to implementing full costing still exist.

Full costing has been one of the important pillars of EUA’s work on financial sustainability, and EUA will continue to take this work forward through two new projects launched at the end of 2012, DEFINE and ATHENA.

In Croatia the process of full costing implementation started at the University of Zagreb, which hosted the EUIMA country workshop in June 2010, and initiated the debate in Croatia. The workshop gathered more than 60 participants from nearly all Croatian universities, including the senior leadership, administration and academic staff members. One of the central issues addressed during the workshop was the highly decentralised structure and governance of Croatian universities, which present a major challenge to complex reforms, such as the implementation of full costing.

Croatian universities face a number of challenges, such as the diverse accounting systems used by individual faculties, which are traditionally based on a budgetary accounting concept. The goal of these systems is primarily to comply with the legal requirements of external reporting, rather than providing quality information for effective internal management. Information regarding costs incurred for special programmes or international projects cannot be extracted. The universities therefore plan to develop a costing model that identifies and monitors all costs related to university activities. There is still a lack of government support and funding and, following the recommendations of EUA and international experts, ensuring government support for the implementation process will be one of the project group’s primary challenges in the near future.

The full report can be downloaded below.