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Accounting Methodology Document 2018-19

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Accounting Methodology Document 2018-19 Accounting Methodology Document 2019 Relating to the Regulatory Financial Statements Contents Page 1 INTRODUCTION ........................................................................................................................................ 5 1.1 REGULATORY REPORTING REQUIREMENTS ......................................................................................................... 5 1.2 INTRODUCTION TO THE AMD ........................................................................................................................ 5 1.3 STRUCTURE AND PURPOSE OF THE AMD .......................................................................................................... 5 1.4 SCOPE OF DOCUMENT ................................................................................................................................... 7 2 BUSINESS AND SYSTEM OVERVIEW ........................................................................................................ 11 2.1 BT GROUP AND REGULATORY REPORTING ....................................................................................................... 11 2.2 THE REPORTING HIERARCHY FOR USE IN THE AS SYSTEM .................................................................................... 12 2.2.1 Financial and Management Reporting route ................................................................................ 12 2.2.2 Regulatory Reporting Route (AS system) ...................................................................................... 12 2.2.3 Attribution of financial information to Markets and Services....................................................... 13 2.3 THE AS SYSTEM, COSTPERFORM .................................................................................................................. 13 2.3.1 System overview ........................................................................................................................... 13 2.3.2 System processes and processing totals ....................................................................................... 15 2.3.3 Controls ......................................................................................................................................... 16 3 ATTRIBUTION METHODOLOGIES OVERVIEW .......................................................................................... 18 3.1 INTRODUCTION ......................................................................................................................................... 18 3.2 INTRODUCTION TO THE SEQUENCING OF ATTRIBUTIONS AT THE FIRST PROCESSING LEVEL, LEVEL 101 .......................... 19 3.3 INTRODUCTION TO ATTRIBUTION STAGES AFTER LEVEL 101 ................................................................................ 20 3.3.1 Activity Groups to Plant Group or Rest of BT Residual (Processing level L121-601 and 701) ....... 20 3.3.2 Plant Groups to Component (Processing Level 801) ..................................................................... 21 3.3.3 Component to Service (Processing Level 870) ............................................................................... 21 3.4 EXPLANATIONS OF ATTRIBUTION CONCEPTS .................................................................................................... 21 4 ACCOUNTING POLICIES .......................................................................................................................... 24 4.1 BASIS OF PREPARATION OF THE RFS .............................................................................................................. 24 4.2 PRINCIPLES OF VALUATION OF NON-CURRENT ASSETS ...................................................................................... 25 4.3 PROPERTY, PLANT AND EQUIPMENT AND SOFTWARE INTANGIBLE ASSETS ............................................................. 25 4.4 CURRENT COST OF PROPERTY, PLANT AND EQUIPMENT AND SOFTWARE INTANGIBLE ASSETS ................................... 25 4.5 DEPRECIATION .......................................................................................................................................... 26 5 CCA VALUATION METHODS .................................................................................................................... 27 5.1 INTRODUCTION ......................................................................................................................................... 27 5.2 CHOICE OF VALUATION METHOD ................................................................................................................... 28 5.2.1 New technology and its use as MEA ............................................................................................. 28 5.2.2 Unit costs ...................................................................................................................................... 29 5.2.3 Choice and application of indices for Indexation Method............................................................. 29 5.2.4 Depreciation .................................................................................................................................. 29 5.2.5 Disposals, write-outs and write offs .............................................................................................. 30 5.3 DETAILED VALUATION METHODOLOGY .......................................................................................................... 30 5.3.1 Introduction .................................................................................................................................. 30 5.3.2 Land & Buildings ........................................................................................................................... 30 5.3.3 Access – Copper ............................................................................................................................ 30 5.3.4 Fibre .............................................................................................................................................. 31 5.3.5 Duct ............................................................................................................................................... 31 5.3.6 Voice Switch .................................................................................................................................. 32 5.3.7 Transmission ................................................................................................................................. 33 5.3.8 Other ............................................................................................................................................. 33 6 DIRECT ALLOCATIONS ............................................................................................................................ 39 7 APPORTIONMENT MODELS .................................................................................................................... 41 7.1 INTRODUCTION TO APPORTIONMENT MODEL BASES AT LEVEL 101 ..................................................................... 41 7.2 APPORTIONMENT MODEL DICTIONARY – RULE TYPE 3 BASES ............................................................................ 41 7.3 OUC DRIVEN BASES – RULE TYPE 3 BASES ...................................................................................................... 84 Introduction .................................................................................................................................................. 84 Detail for each CFU and CU’s OUC-driven bases ........................................................................................... 84 Openreach (OUC B) ....................................................................................................................................... 85 Group (OUC C)............................................................................................................................................... 86 Corporate adjustments (OUC E) .................................................................................................................... 86 BT Facilities Management (OUC F) ............................................................................................................... 87 EE (OUC S (2018/19: G))................................................................................................................................ 87 BT Business & Public Sector (OUC N (2018/19: H)) ....................................................................................... 87 Enterprise (OUC N (2017/18 Wholesale: K)) ................................................................................................. 87 Technology (OUC T) ...................................................................................................................................... 88 Security (OUC V) ............................................................................................................................................ 89 Property (OUC W) ......................................................................................................................................... 90 Group Procurement (OUC Y) ......................................................................................................................... 90 Group Consolidation Units (OUC Z) ............................................................................................................... 91 8 TRANSFER CHARGES ..............................................................................................................................
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