FCC Accounting and Cost Allocation - Curtis Blakely … · FCC Accounting and Cost Allocation Presented by: Kathy Cole, CPA Curtis Blakely & Co. P.C. P. O. Box 5486 Longview, TX 75608

FCC Accounting and FCC Accounting and Cost AllocationCost Allocation

Presented by:Presented by:

Kathy Cole, CPAKathy Cole, CPACurtis Blakely & Co. P.C.Curtis Blakely & Co. P.C.

P. O. Box 5486P. O. Box 5486Longview, TX 75608Longview, TX 75608

903/758903/[email protected]@cbandco.com

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I love my Mimi!!

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Phase 2 Phase 2 -- FCC 01FCC 01--305305

Report and Order in CC Docket Nos. Report and Order in CC Docket Nos. 0000--199, 97199, 97--212, and 80212, and 80--286286

Adopted: Adopted: 1010--1111--0101Released:Released: 1111--55--0101Effective:Effective: 88--66--0202Optional implementation as of 1Optional implementation as of 1--11--0202

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This Order streamlines and modifies the FCC’s This Order streamlines and modifies the FCC’s accounting rules and its financial and operating accounting rules and its financial and operating data reporting requirements for incumbent local data reporting requirements for incumbent local exchange carriers (LECs). exchange carriers (LECs).

55


Reduces the number of Class A Reduces the number of Class A accounts/accounts/subaccountssubaccounts in Part 32 by 45 percent, in Part 32 by 45 percent, maintaining only those currently used in ongoing maintaining only those currently used in ongoing regulatory activities under the Communications regulatory activities under the Communications Act and the 1996 Act.Act and the 1996 Act.

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Reduces the current Class B Reduces the current Class B account/account/subaccountssubaccounts in Part 32 by 27 percent.in Part 32 by 27 percent.

77


Establishes new subaccounts for circuit and Establishes new subaccounts for circuit and packet under digital switching, electronic and packet under digital switching, electronic and optical subaccounts under circuit equipment, optical subaccounts under circuit equipment, and wholesale and retail subaccounts under and wholesale and retail subaccounts under services.services.

88


Eliminates the requirements for an annual Eliminates the requirements for an annual inventory of accounts 1220 and 2311.inventory of accounts 1220 and 2311.

99


Adopts Statement of Financial Accounting Adopts Statement of Financial Accounting Standards (SFAS) 116, which requires Standards (SFAS) 116, which requires companies to record in the current period a companies to record in the current period a liability and related expense for unconditional liability and related expense for unconditional pledges to make contributions in future years.pledges to make contributions in future years.

1010


Revises affiliate transaction rules to eliminate Revises affiliate transaction rules to eliminate the requirement to do a fair market comparison the requirement to do a fair market comparison for asset transfers that total less than $500,000 for asset transfers that total less than $500,000 annually.annually.

1111

Phase 2 Phase 2 -- FCC 01FCC 01--305305In situations where a comparison of cost to market value In situations where a comparison of cost to market value is required for affiliate transactions, carriers can now use is required for affiliate transactions, carriers can now use the higher or lower of cost or market value as a floor or the higher or lower of cost or market value as a floor or ceiling, depending on the direction of the transaction. ceiling, depending on the direction of the transaction. For example, if the transaction were from the carrier to For example, if the transaction were from the carrier to the nonregulated affiliate, the higher of cost or market the nonregulated affiliate, the higher of cost or market valuation would function as the floor amount, valuation would function as the floor amount, i.e.i.e., the , the carrier could value the asset or service at that amount or carrier could value the asset or service at that amount or higher. If the transaction were from the nonregulated higher. If the transaction were from the nonregulated affiliate to the carrier, the lower of cost or market affiliate to the carrier, the lower of cost or market valuation would function as the ceiling, valuation would function as the ceiling, i.e.,i.e., the the incumbent carrier could value the asset or service at that incumbent carrier could value the asset or service at that amount or lower.amount or lower.

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Decreases from 50 percent to 25 percent the Decreases from 50 percent to 25 percent the portion of sales of assets or services which must portion of sales of assets or services which must be to third parties in order for a transaction with be to third parties in order for a transaction with an affiliate to qualify for prevailing price an affiliate to qualify for prevailing price treatment.treatment.

1313


Revises the expense limit rules to include tools Revises the expense limit rules to include tools and test equipment located in the central office and test equipment located in the central office (accounts 2211(accounts 2211--2232) in the $2,000 expense 2232) in the $2,000 expense limit.limit.

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Simplifies deferred tax accounting by allowing Simplifies deferred tax accounting by allowing carriers to book Account 1437, deferred tax carriers to book Account 1437, deferred tax regulatory asset net of Account 4361, deferred regulatory asset net of Account 4361, deferred tax regulatory liability.tax regulatory liability.

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Simplifies how carriers separate regulated from Simplifies how carriers separate regulated from nonregulated costs by permitting carriers to treat as nonregulated costs by permitting carriers to treat as regulated revenues certain activities that are not regulated revenues certain activities that are not regulated. Account 5280 will be modified to allow regulated. Account 5280 will be modified to allow carriers to identify their nonregulated revenues into two carriers to identify their nonregulated revenues into two groups: one subsidiary record for all the revenues from groups: one subsidiary record for all the revenues from regulated services treated as nonregulated and the regulated services treated as nonregulated and the second for all other nonregulated revenues.second for all other nonregulated revenues.

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Permits carriers to treat rates in interconnection Permits carriers to treat rates in interconnection agreements as tariffed rates for purposes of cost agreements as tariffed rates for purposes of cost allocation rules.allocation rules.

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Eliminates the annual Cost Allocation Manual Eliminates the annual Cost Allocation Manual (CAM) filing for mid(CAM) filing for mid--sized carriers. Also, sized carriers. Also, eliminates the requirement that CAMs of mideliminates the requirement that CAMs of mid--sized carriers be subject to an attest audit every sized carriers be subject to an attest audit every two years. Midtwo years. Mid--sized carriers will need to be sized carriers will need to be prepared to produce documentation of how they prepared to produce documentation of how they separate regulated and nonregulated costs as separate regulated and nonregulated costs as well as file a certification with the Commission well as file a certification with the Commission stating they are in compliance.stating they are in compliance.

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Eliminates the requirement to do a revenue Eliminates the requirement to do a revenue study analyzing the effect of proposed study analyzing the effect of proposed accounting standards changes prior to accounting standards changes prior to implementing those changes. Retains the implementing those changes. Retains the requirement for carriers to notify the Commission requirement for carriers to notify the Commission of their intentions to adopt a FASB change and of their intentions to adopt a FASB change and how the carrier intends to implement this how the carrier intends to implement this change.change.

1919


Amends accounting rules to expressly limit them Amends accounting rules to expressly limit them to incumbent LECs.to incumbent LECs.

2020


Modifies ARMIS reporting for the large Modifies ARMIS reporting for the large incumbent LECs to eliminate obsolete reporting incumbent LECs to eliminate obsolete reporting requirements and to capture technological requirements and to capture technological changes. Midchanges. Mid--sized incumbent LECs are no sized incumbent LECs are no longer required to file ARMIS 43longer required to file ARMIS 43--02, 4302, 43--03 and 03 and 4343--04 Reports.04 Reports.

2121

FCC’s Order on ReconsiderationFCC’s Order on Reconsideration

47 CFR Parts 32, 51 and 5447 CFR Parts 32, 51 and 54(CC Docket No. 00(CC Docket No. 00--199; FCC 02199; FCC 02--68)68)

Adopted:Adopted: 33--77--0202Released:Released: 33--88--0202

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Reinstate Account 3400, Accumulated Reinstate Account 3400, Accumulated amortization amortization –– tangible, a Class B accounttangible, a Class B account

This account was eliminated in the Phase 2 This account was eliminated in the Phase 2 Report and Order. Class B carriers were Report and Order. Class B carriers were required to use Account 3410, Accumulated required to use Account 3410, Accumulated Amortization Amortization –– capitalized leases for part of what capitalized leases for part of what was entered into Account 3400. The remaining was entered into Account 3400. The remaining portion of what was in Account portion of what was in Account 3400 was 3400 was intended to go into Account 2682, Leasehold intended to go into Account 2682, Leasehold improvements.improvements.

2323


Clarifies that midClarifies that mid--sized carriers are not required sized carriers are not required to file ARMIS 43to file ARMIS 43--02 (USOA Report), 4302 (USOA Report), 43--03 (Joint 03 (Joint Cost Report), and 43Cost Report), and 43--04 (Separations and 04 (Separations and Access Report)Access Report)

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Extends the effective date of the changes to the Extends the effective date of the changes to the Part 32 chart of accounts to JanuaryPart 32 chart of accounts to January 1, 20031, 2003

This will allow the accounting changes to be This will allow the accounting changes to be implemented at the beginning of the fiscal year implemented at the beginning of the fiscal year and will avoid the dual date capturing that could and will avoid the dual date capturing that could occur if the Part 32 chart of accounts were occur if the Part 32 chart of accounts were implemented in midimplemented in mid--year. It will also give carriers year. It will also give carriers additional time to revise their accounting systems additional time to revise their accounting systems to incorporate the many changes to the Part 32 to incorporate the many changes to the Part 32 chart of accounts adopted in the Phasechart of accounts adopted in the Phase 2 Report 2 Report and Order.and Order.

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Documents

FCC Accounting and Cost Allocation - Curtis Blakely … · FCC Accounting and Cost Allocation Presented by: Kathy Cole, CPA Curtis Blakely & Co. P.C. P. O. Box 5486 Longview, TX 75608