Universities will have to account for the use they make of every penny of public and private funds from next year as part of a Treasury-driven exercise.
Academics will be forced to reveal how much time they spend on teaching, research and other activities in a costing system that will cover all activities at all universities.
The "transparency review" aims to unpick the dual-support system for research. Universities hope to use the review to show that overheads associated with research are not being met by research funding, so they can lever out more money from the next comprehensive spending review.
But some university officials and department heads fear it will be the thin end of the wedge in attempts by ministers and funding chiefs to make institutions justify their spending in detail.
And there are fears that funding councils could use information gained to insist that teaching grants be spent on teaching, if it were shown that institutions use this money to subsidise research.
Behind the review are officials in the Department of Trade and Industry, encouraged by the Treasury. They want universities to report five total costs from next year: publicly funded teaching; non-publicly funded teaching; publicly funded research; non-publicly funded research; and other activities. Universities now report income rather than expenditure on teaching and research.
Heads of department will be expected to estimate the time staff spend on these activities. Academics could be asked to keep diaries for a few weeks a year or to complete time-sheets.
The plans have brought a wary response from the sector. James Hunt, director of finance at the University of Warwick, said: "There is a debate between those who recognise that costing is essential for future research funding and those who think that it will be an extra administrative burden and potentially intrusive into people's working practices. If the sector is to have a good chance of success in the next comprehensive spending review, we have to make progress with this."
Rodney Eastwood, director of planning at Imperial College, London, said:
"Most universities would prefer to receive a block grant. The best people to make judgements about spending on teaching, research and other activities are the universities."
Brian Martin, head of physics at University College London, added: "The concern is that the Higher Education Funding Council will start asking us to justify teaching and research costs."
The director-general of the research councils, John Taylor, is overseeing the transparency review. He is understood to have stressed to a meeting of the Committee of Vice-Chancellors and Principals last week that the measures are about accountability, not control, and are not meant to be a big bureaucratic exercise.
There are concerns over the pace at which universities must introduce the costings system. Eight pilot institutions - Birmingham, Bristol, Cardiff, Portsmouth, Surrey, Strathclyde and Warwick universities plus University College, London - have three months to introduce the new methods. The government wants the 30 research-led universities to implement the system from September 2000. "The compressed timetable does not allow the time that cultural change normally calls for," said Robin Jackson, policy adviser at the CVCP.
The review is expected to show a shortfall in the funding of research overheads. "Data could reveal cross-subsidies between funding streams and disciplines, which would raise policy and management issues," Dr Jackson said.
The recommendations will be presented to the government's chief scientific adviser, senior civil servants and research and funding council chiefs next week.