TMI BlogThe Cost Accounting Records (Telecommunications) Rules, 2002X X X X Extracts X X X X X X X X Extracts X X X X ..... lar mobile; (3) Telex; (4) Telegraphy; (5) Voice mail /Audiotex service; (6) Internet operations including gateway service/E-mail; (7) Packet switched public data network (PSPDN) service; (8) Wireless in local loop (WILL) service; (9) Public mobile radio trunk service; (10)Very Small Aperture Terminal service; (11) Global mobile personnel communication services; (12) Leased circuits; (13) Internet ports ; (14) National Long Distance Operator; (15) Internet Telephony; (16) Radio Paging; (17) Any other telecommunication service for commercial use. Provided that these rules shall not apply to a company, - (a) the aggregate value of the machinery and plant installed wherein, as on the last date of the preceding financial year, does not exceed the limits as specified for a small scale industrial undertaking under the provisions of Industries (Development and Regulation) Act, 1951 (65 of 1951); and (b) the aggregate value of the turnover made by the company from sale or supply of all its products or activities during the preceding financial year does not exceed ten crore rupees. 3. Maintenance of records - (1) Every comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able as provided under sub-section (2) of section 642 read with sub-sections (5) and (7) of section 209 of the Companies Act, 1956 (1 of 1956). SCHEDULE [see rule 3] 1. MATERIALS AND SUPPLIES : (1) The proper records shall be maintained showing all receipts, issues and balances both in quantities and values of each item of materials. stores and supplies such as cables, poles, telephone instrument, roust box, dropwire, lines and wires etc, used in the maintenance and operation of different activities such as access network, local switching, local transmission, long distance switching, transmission, and international gateway access, referred to in rule 2. These records shall contain such details so as to enable the company to determine the quantity and cost of receipt (including all direct charges up to the location in respect of major materials/supplies), issues and balances in quantity as well as value of each item of all such materials. The basis on which said costs of issue and consumption, for each telecom activity referred to in rule 2, have been calculated shall be indicated in the cost records and followed consistently. In the case of imported materials ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollectively as production bonus or under any other scheme based on output; (c) overtime wages; (d) earnings of casual or contractual labour; (e) bonus or gratuity, statutory as well as other; (f) contribution to superannuation scheme; and (g) any other earning of the nature specified in (a) to (f) above. (2) The records shall be maintained in such a manner as to enable the company to furnish necessary particulars under this head for the different services/ and for different telecom activities in Proformae A, B, C and D of Schedule I annexed to these rules. The records may be maintained to book these expenses activity-wise. Where the employees work in such a manner that it is not possible to identify them with any specific activity, the employees' cost shall be apportioned to various activities on equitable and reasonable basis and applied consistently. (3) The idle labour cost shall be separately recorded under classified headings indicating the reasons therefor. The method of accounting followed for accounting of idle time payments shall be disclosed in the cost records. (4) Any wages and salaries allocable to capital works, such as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The proper records showing quantity and cost of purchased or self produced utilities such as power, air conditioning required for any of the activities under reference, shall be maintained by the company. 5. REPAIRS AND MAINTENANCE: (1) The proper records showing the expenditure incurred by the workshop and on repairs and maintenance on various activities shall be maintained. The records shall also indicate the basis of charging the repairs and maintenance expenses to different activities. Where maintenance work is done by direct workers, the wages and salaries of such workers shall be treated as direct expenses of the respective activity. If the services are utilized for other products/activities also, the manner of charging a share to such products/activities shall be on equitable and reasonable basis and applied consistently. (2) The records shall also indicate the quantity and amount and also the proportion of closing inventory of stores and spare parts representing items which have not moved for over twenty four months. (3) The expenditure on major repair work from which benefit is likely to accrue for more than one financial year shall be allocated over the peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative depreciation charged in the cost records, against any individual item of asset shall not, however, exceed the original cost of the respective asset. 7. OTHER OVERHEADS: (1) The Proper records shall be maintained for the activities under reference showing the various items of expenses comprising the other overheads. These expenses shall be analysed, classified and grouped according to functions, namely, operation, maintenance, administration, marketing and distribution for each activity. (2) Where the company is manufacturing products or providing services, carrying out activities other than the activities under reference, the records shall clearly indicate the basis followed for apportionment of the common overheads including head office expenses of the company to such products, other activities and to telecom activities including capital works. Where certain expenses forming part of overheads can be identified with a particular activity or a product, such expenses shall be first segregated and charged to the relevant activity or product and thereafter the residual expenses under the above categories of overheads shall be apportioned on a reasonable and equitable bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search and development work extends over more than one financial year, such expenses shall be treated as deferred revenue expenses and charged to the cost of activities under reference and all other products if any, on equitable and reasonable basis and applied consistently. The detailed criteria on which it has been decided to extend the utility period of these expenses to more than one financial year shall be disclosed in the cost records. The following criteria, which are only indicative and not exhaustive, may be adopted in such cases : (i) the activity or product is clearly defined and the costs attributable to the activity or product can be separately identified; (ii) the technical feasibility of the activity or product has been demonstrated; (iii) the management of the enterprise has indicated its intention to engage in the activity or produce and market or use the product or process; (iv) there is a reasonable indication that current and future research and development costs to be incurred on the project together with expected volume of activity, production, administrative and selling costs are likely to be more than covered by related future re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each revenue earning unit in relation to the activities under reference in Proformae A, B, C and D. The revenue earning unit means a part or section or geographical location identified by the company for which books of accounts and other records are maintained independently for accounting and administrative convenience and it may be based on grouping or classification of services as referred to in rule 2 above or on the basis of consolidation of streams of revenue and expenditure and/ or assets and liabilities for the presentation of accounts by the company. (2) The service rendered by one activity which forms input for a subsequent activity shall be valued at cost upto the service. 13. ACTIVITY RECORDS: The quantitative records of the activities/ services provided in appropriate units of measurement along with proper classification, sub-classification etc. shall be maintained by the company. The records shall be maintained in such a manner that will enable a company to cost and correlate revenues from such classified or sub-classified activities/ services under the main activities as stipulated in rule 2. 14. RECONCILIATION OF COST AND ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow assets added as replacement and those added for increasing existing capacity. (3) In the case of new projects for activity under rule 2, proper records shall be maintained indicating the funds raised from different sources, their utilization, stage-wise cost incurred and progress of the project as per the project report. Cost and time over run shall also be analysed with reference to the cost of services/activity and profitability of the company. 17. CAPTIVE USE : The proper records shall be maintained showing the quantity and cost of telecom services used by the company for self-use and free services provided to employees and others. 18. HUMAN RESOURCES DEVELOPMENT: Expenditure incurred by the company on the training and development activity of human resources shall be recorded separately. 19. RELATED-PARTY TRANSACTIONS: (1) In respect of related party transactions or supplies made or services rendered by a company to its holding company or subsidiary or a company termed "related party relationship" as defined below and vice-a-versa, records shall be maintained showing contracts entered into, agreements or understanding r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) the parties listed below, in the course of their normal dealings with an enterprise by virtue only of those dealings (although they may circumscribe the freedom of action of the enterprise or participate in its decision-making process); (i) providers of finance; (ii) trade unions; (iii) public utilities; (iv) government departments and government agencies including government sponsored bodies. Explanation :- for the purpose of these Rules, - (a) " related party relationships" means parties who are considered to be related if at any time during the reporting period one party has the ability to control the other party or exercise significant influence over the other party in making financial and/or operating decisions; (b) " related party transaction" means a transfer of resources or obligations between related parties, whether or not a price is charged; (c) " control" means - (i) ownership, directly or indirectly, of more than one-half of the voting power of an enterprise; or (ii) control of the composition of the Board of Directors in the case of a company or of the composition of the corresponding governi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons during the year Total at the end of the year As at beginning of the year As at the end of the year A. Basic Telephony 1. (specify) 2. etc. B Cellular Mobile Telephone Services 1. (specify) 2. etc. C Other Services, if any 1. (specify) 2. etc. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8) Depreciation 9) Amortisation on the fixed component of license fees 10) License Fee paid as Revenue share 11) Lease Rent, if any 12) Insurance 13) Royalty or technical know-how fee 14) Other overheads 15) Total (1 to 14) B Other Charges or Levies 1)Interconnection charges - Port Charges - Leased Line Charges - Other interconnection charges 2)Spectrum Royalty 3)Spectrum License Fee 4) DOT charges, if any 5) Other expenses (specify) 6) Total (1 to 5) C Administrative Overheads (Specify major heads) (a) (b) etc. Sub total D Cost of O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. Total duration of metered calls or hours of usage. 11. Average duration per call (minutes) ( For Basic and Cellular) 12 Average call per direct exchange line or cellular subscriber (For asic and Cellular) 13. Telephone Traffic (in minutes) (A) Incoming Traffic from - (i) Public switch telephone network (ii) Wireless in local loop (iii) Mobile (iv) National long distance operator (Intra Circle) (v) National long distance operator (Inter Circle) (vi) International long distance operator (B) Outgoing Traffic to - (i) Public switch telephone network (ii) Wireless in local loop (iii) Mobile (iv) National long distance operator (Intra Circle) (v) National long distance operator (Inter Circle) (vi) International long distance operator Cost Information S.No Particulars Quantity Rate Amount Cost per unit (Rupees) (Rupees) Current Year (Rupees) Previous Year (Rupees) A Apportioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I Other Cost, if any (Specify) J Total Cost (F+G+H+I) Revenue Information K 1. Installation Charges 2. Activation Charges 3. Rental Charges 4. Call Charges 5. Interconnection Charges a) From related Parties b) From Others L Other Charges (specify) M Revenue Earned (excluding statutory levies, if any) N Margin Per Call (M -J) O Margin Per Minute of Usage P Margin Per Direct exchange line / Channel / Port / Circuit Notes: 1. Separate cost statement shall be prepared for each of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. Stock adjustment, if any 17. Less : Credits, if any 18. Borrowing costs 19. Marketing expenses 20. Add : any other expenses not included in cost 21. Less : any other income not considered in cost 22. Total cost (excluding statutory levies like service tax, etc.) 23. Total revenue earned (excluding statutory levies like service tax, etc.) 24. Margin 25. Add : Export benefits and incentives, if any 26. Total margin Notes:- 1. All items of income and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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