Transparent Costing: Has the emperor got clothes?

Janek Ratnatunga and Erwin Waldmann

Accounting Forum, 2010, vol. 34, issue 3-4, 196-210

Abstract: Transparent Costing (TC) is a framework for determining the full indirect costs and thereby the full costs (FC) of Australian Competitive Grant (ACG) research projects; with the objective of ensuring the full funding of these projects by the government, so that they could be sustained in the long-run, and preventing their cross-subsidisation from other revenue sources. If a university wishes to be fully funded for its AGC research projects, it is mandatory to undertake a TC exercise and allocate the indirect costs of research activities. It was found in this study that whilst the objectives of FC appear worthwhile, FC may not prevent the practice of cross subsidisation. Also whilst it was found that Time-Driven Activity-Based Costing (TDABC) is preferable to ABC in the TC modelling of ‘research only’ departments and institutes; both approaches do not provide accurate information in ‘teaching and research’ departments. In these departments more accurate estimations could be obtained from studying the workload allocation methods and conducting direct interviews of the staff undertaking research on ACG and other externally funded grants.

Date: 2010
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DOI: 10.1016/j.accfor.2010.08.005

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