University Assessment of the New Common Chart of Accounts

In Denmark, there are two types of universities - categorized according to organizational form and management focus - education and research, as shown in Table 8.4.

Among the mono-faculty universities, there are two different areas of focus. An education-intensive university, which manages education hours and a research-intensive university, which manages research hours according to the demands of external sources of funding. Both universities have central accounting systems. In contrast, multi-faculty universities have a high degree of decentralized management, and individual faculties are

Table 8.4 The organizational form and focus of the universities

University

Organizational form

Primary management focus

CBS

Mono-faculty

Education

DTU

Mono-faculty

Research

KU

Multi-faculty

Varies between faculties

AU

Multi-faculty

Varies between faculties

focused on either research or education. This focus is also reflected in university sources of funding and revenues. Their individual funding structure determines the primary management and accounting focus.

University Revenue

The university management focus depends on from where revenue comes (Table 8.5):

At CBS, 63% of the revenue is provided by governmental education funds, and 21% is provided by basic research funds (Copenhagen Business School 2019). This has a natural influence on the primary management focus and is supported by a time recording based on standard hours for delivering education. The internal organization is focused on function, and the governance model is built around education:

VIP time is allocated via standard hours. It is the starting point, when we make a purpose allocation. But this means that what is not allocated to education is through residual research.

Following the focus on education, there is also awareness of the profitability of courses:

Table 8.5 Distribution of universities’ revenue

University

Education

Research basic funds

External

research

funding

Other

income

Total

CBS

63%

21%

9%

7%

100%

DTU

15%

31%

35%

19%

100%

KU

24%

34%

34%

8%

100%

AU

29%

32%

32%

7%

100%

Notes

* Other income includes consultancy services, commercial income and research-based advice.

All figures are from the 2018 annual reports and own calculations.

We are losing money on the graduate program. It is simply more expensive for us to train a candidate, and we have to maintain a balance. What we earn from the bachelor’s programs should not be eaten up by losses at the master’s levels. One of the main reasons for losses is the resources used to support master’s theses.

In contrast to CBS, DTU obtains only approximately 15% of its revenues from educational governmental funds and approximately 66% from basic research and external funding (Danmarks Tekniske Universitet 2019). DTU has implemented time registration of research activities and has built the organization around individual research projects:

We have arranged ourselves as a project organization. Everything is projects. We customize each project to the client’s requirements. This is the practice regarding external research projects.

Although the primary focus is research, attention is also paid to the costs of education:

We have to think very carefully if we want to do more education because it is at the expense of research. After all, it costs a fortune to make an engineer.

In contrast to these two universities, KU and AU are multi-faculty and decentralized in the sense that each faculty has great influence on how it is organized and how its own management model is designed. The primary management focus is on either research or education. One possible explanation for this difference between KU and AU compared with CBS and DTU may be that the course programs at KU and AU cover significantly more fields of study:

We have relatively large faculties, e.g. health science, which are not involved in education. Consequently, the research cost is easy to calculate. Furthermore, externally funded research is managed as projects - that is not difficult. However, at the overall level, they contribute to education, but it is impossible to separate. We do not account for the individual education programs and are not able to answer, “What is the cost of a bachelor of law?” We do not have these figures.

The management focus is either education or research, independent of whether the organization is centralized or decentralized. Areas that fall outside the primary management focus are considered a “residual”:

Everything that is not defined as education is considered a residual and is by definition research. A researcher will typically have a day where there may be one or more research projects, and then there

will be the residual, meetings and education, etc.

In summary, we see that the universities are different regarding how their research and education are funded. Some universities have more funding for research, and others have more funding for education. This implies that the primary management focus at each university is aligned with this funding structure and that their accounting systems and procedures are equally designed. This design also includes accounting for costs and the possibilities to trace costs to cost objects.

 
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