Instructions on managing research income5/12/2018

Dear Managers

Recently you were provided with instructions regarding the changes in the 2010 HERDC specifications. To clarify the requirements please ensure you follow the following account code usage.

For Research Income

  1. Where there is an agreement in place to “share” research income with an outside entity (HERDC specifications defines income as shared research income if a component is passed from the primary recipient to another party, where that party is named in the contract/agreement for the grant or tender/application for funding)
  • Gross income is to be coded to the relevant income account code e.g. account code 343Private Industry
  • The distribution to the external entity should be coded to account code 351.

This results in a reduction of the income that UWA can claim for HERDC purposes.

  1. Where the funding agreement:
  • does not specify the sharing of income with another entity but;
  • the University is contracting or distributing funds to another organisation

This is treated as “third party” income for HERDC purposes (HERDC specifications defines third party income as income a Higher Education Provider (HEP) receives, and then contracts and/or distributes to another organisation, including affiliated organisations, to undertake Research)

  • Gross income is to be coded to the relevant income code e.g. account code 343 Private Industry
  • The distribution to the third party should be coded to “Grants to Allied Institutions,” account 764

This results in a reduction of the income that UWA can claim for HERDC purposes.

  1. Where the funding agreement
  • does not specify the sharing of income with another entity and
  • the University does not contract or distribute funds to another organisation as defined as “third party”
  • however, the University has a form of affiliation, secondment, reimbursement or other agreement with an external entity to enable the University to undertake the research. (For example secondment of staff or joint appointments of staff etc,that falls outside of the HERDC definition of “third party income”. This could be as a result of affiliation or other arrangements with another external entity.)
  • Gross income is to be coded to the relevant income code e.g. account code 343 Private Industry
  • The external entity is required to provide a collaborating body invoice to UWA for recovery of expenditure for example, secondment staff costs or associated goods and services. The expenditure codes to be applied to this expenditure will be based on the nature of the expenditure type e.g. account code 530 Consulting & Prof Serv, 640 Laboratory Apparatus & Supplies etc.

This will result in the University being able to report the full amount of income for HERDC purposes. This is the preferred contractual structure that should be arranged where possible to optimise the revenue and other benefits to the University.

Unfortunately the changes to the HERDC specifications for 2009 data were issued in 2010 and disallow the University from including income that is distributed to “third parties” similarly to “shared” income, whilst previously this was acceptable. However, the University is still required though in its annual financial report to account for “shared” income as net of distributions, whilst reporting “third party” income as gross income with an expenditure line showing grants distributed through account 764. Both the financial report and HERDC will be subject to audit by the Office of Auditor General.

All Faculties, Schools and Centres should now review each instance where 764 has already been used this year (in their research PGs only) and change the account code where relevant in PeopleSoft to reflect the new guidelines above. We need to ensure accuracy and consistency in coding for 2010income for the next HERDC audit by the Auditor General’s Office in 2011.

Please be aware that incorrect coding of grant activity may impact on UWA’s portion of income that we are able to claim in the annual HERDC return and will ultimately impact the budget allocation to your Faculty through the University’s Faculty Funding Model. Similarly incorrect coding may result in audit qualification of the HERDC data collection or the University’s financial report. The HERDC definitions of “shared research income” and “third party income” are available on the Research Services web page,along with a copy of the current full specifications

If you are in doubt if the funding agreement is considered “shared” or “third party” under the definitions provided by HERDC specifications for data collections please contact Anne Cargill, (6488 7017), Chermain Cheong, (6488 2040) or Valerie Mandel, (6488 3931).

Please circulate this information to all accounts staff in your area as soon as possible. (Financial Services Faculty Accountants have been copied into this email.)

Valerie Mandel I Manager Research Finance Team I Research Grants Office
Research Services M459 IThe University of WesternAustraliaI35 Stirling HighwayICrawley WA 6009
ITel: +61 8 64883931 IFax: +61 6488 1075

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