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Traditionally, universities have been anything but a forerunner in innovation and development of management accounting. In fact, as an academic of UK universities for over two decades, I would say that the role of management accounting in UK universities has always been quite minimal (and certainly not visible).

 

graduation

graduation (Photo credit: Sean MacEntee)

However, in more recent times, higher education institutions (HEIs) have experienced an increase in management accounting activity. For instance, during the last decade, HEIs require their faculty to record how much time they have allocated to particular work-related tasks (e.g., teaching, research, administration). This is called the Transparency Approach to Costing (TRAC), and is essentially an activity-based costing system, the aim of which is provision of more accurate costing of HEI education programmes which, in turn, can also inform sensible pricing decisions, see: http://www.hefce.ac.uk/whatwedo/lgm/trac/practitioners/tract/

 

In very recent times, UK universities have been subjected to multiple and very significant events and ‘drivers’ that have forced them to take a look at how they organise and manage themselves. For instance, UK universities receive relatively less government funding for their teaching and research activities, compared to a few years ago. UK universities nowadays are very much a commercial phenomenon, for which student fees (cf. pricing) and other income sources have become a critical aspect of day-to-day management. Competition has heightened markedly, on an international scale – including competition from institutions that were not previously there just 5 years ago, such as the new ‘private’ universities.

 

It is not surprising therefore to have witnessed a flurry of new management accounting activity across UK universities. In particular, it has been quite noticeable in the last few years how much more time and effort seems now to be directed towards such activities as cost management, strategising, forecasting and managing risks.

 

Can you think of what aspects of management accounting we might expect to see assume greater importance in HEIs in future years?

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