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Eligible Revenue Information Sessions

Eligible Revenue Information Sessions. 2012. Overview. Purpose of session Legislative framework Reporting requirements Levies and Charges based on eligible revenue Cutover to TUSMA legislation 2010-11 period update 2011-12 reporting 2011-12 audit requirements Tools. Purpose of session.

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Eligible Revenue Information Sessions

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  1. Eligible Revenue Information Sessions 2012

  2. Overview • Purpose of session • Legislative framework • Reporting requirements • Levies and Charges based on eligible revenue • Cutover to TUSMA legislation • 2010-11 period update • 2011-12 reporting • 2011-12 audit requirements • Tools

  3. Purpose of session • assist industry participants to meet their statutory reporting requirements • assist auditors to understand the audit requirements in relation to carrier returns • update carriers and auditors on any changes to the regulatory framework for eligible revenue reporting and related levies and charges

  4. LegislativeFramework Set out in • Telecommunications Act 1997(Telco Act) • Telecommunications (Consumer Protection and Service Standards) Act 1999 (TCPSS Act) • Telecommunications Universal Service Obligation (Eligible Revenue) Determination 2003 • Telecommunications (Participating Persons) Determination 2011 (No.1) (Participating Persons Determination) • Telecommunications (Period for Providing Return of Eligible Revenue) Specification 2010 • Telecommunications (Approved Auditor) Determination 2010 • Telecommunications Universal Service Management Agency Act 2012 (TUSMA Act) • Subsidiary instruments to TUSMA Act – under development

  5. LegislativeFramework What is a carrier? Under section 7 of the Telecommunications Act 1997, a carrier is the holder of a carrier licence. Not all carriers have to submit an eligible revenue return.

  6. LegislativeFramework For each eligible revenue period, a carrier is either: • a participating person - and must submit an Eligible Revenue Submission to the ACMA by 31 October OR • a USO non-participating person – and must submit an eligible statutory declaration to the ACMA by 31 October

  7. LegislativeFramework • A participating person for an eligible revenue period is an entity that was a carrier at any time during that eligible revenue period [section 20A of the TCPSS Act]. • However, the minister has determined that a person is not a participating person when the person (or “grouped carrier”) has: • initial sales revenue; • gross telecommunications sales revenue; OR • eligible revenue ofless than AUD$25 million for the eligible revenue period and the person submits an eligible statutory declaration to the ACMA by 31 October [part 4 of the Participating Persons Determination].

  8. Reporting Requirements

  9. Reporting Requirements From 2012-13

  10. Reporting Requirements • Eligible revenue based on an eligible revenue submission (including substantially compliant eligible revenue return and supporting documents) or otherwise as estimated by the ACMA • Used to calculate fees and charges • Penalties and enforcement if non-compliant

  11. Reporting Requirements Key concepts • Carrierrevenue includes revenue of Declared Related Parties (DRPs) and consolidated related parties • Grouped carrier – for revenue calculation • Declaration of revenue must be verifiable to financial statements or other evidence on request or notification from the ACMA

  12. Levies and Charges 2011-12 and future periods • Telecommunications Industry Levy (TIL) • Annual Carrier Licence Charge (ACLC) (variable component)

  13. Cutover to TUSMA legislation

  14. Cutover to TUSMA legislation 2011-12 / 2012-13

  15. 2010-11 Update • Total claimed total eligible revenue ($28.665 billion) • Total assessed eligible revenue ($28.755 billion) • Understatement of eligible revenue for industry (by $89.3 mil in 2010-11, $48.9 mil in 2009-10 and $71.1 mill in 2008-09 • Partnerships and joint venture earnings disclosure • Mergers and acquisitions and changes in accounting period (evidence requirements) • Evidence for significant deductions

  16. 2011-12 Reporting Key reporting concepts • All participating persons to report • Eligible Revenue Submission on a group basis vs individual basis • Disclose revenue of Declared Related Parties (DRPs) and consolidated related parties

  17. 2011-12 Reporting Key reporting concepts cont. • Evidence for revenues and deductions • Financial statements of carrier and related parties • Audit report OR Audit Waiver granted by the ACMA

  18. 2011-12 Reporting Revenue Allocation Schedule – when submitting ERR Form for more than one carrier

  19. 2011-12 Reporting Include related party revenues Consolidated related party an entity: (a) that is not the participating person; and (b) the revenue of which is included in the annual consolidated financial statements of the participating person’s ultimate Australian parent entity (whose revenues are fully accounted for in the ERR Form)

  20. 2011-12 Reporting Include related party revenues Declared related party Any entity that earns telecommunications sales revenue from the Australian telecommunications industry and that is not a participating person or a consolidated related party and is owned at any time during the eligible revenue period (>49%) by the owner of the carrier

  21. 2011-12 Reporting Multiple Parties Schedule in ERR Form

  22. 2011-12 Reporting Ultimate holding company 50% 50% Carrier X Bluetone

  23. 2011-12 Reporting Multiple Parties Schedule in ERR Form Bluetone 50% 50% 25%

  24. 2011-12 Reporting Carry through to revenue and deductions sheets – example: $100,000 $25,000 25%

  25. Holding Coy interest in Co N2: =(90%x100%x50%)+(90%x80%x50%) =45% + 36% =81% Declared Related Party Factor for Co N2 = Co J interest in Co N2 of 90% Multiplied by Co K interest in Carrier of 80% = 72% Holding Company 45% 100% 90% Co J Co X Co M 100% 49% 80% Co N Co K Co Y 90% 50% 50% 50% Co N1 Co Y1 80% 50% Co Z Carrier A Co N2 30% Holding Coy interest in Carrier A: =90%x80%x80% =58% Co N3

  26. 2011-12 Reporting Multiple Parties Schedule in ERR Form Co N2 80% 90% 72%

  27. 2011-12 Reporting ERS A complete Eligible Revenue Submission (ERS) is made up of two parts: • A Return • Eligible Revenue Return Form (ERR Form) • Final Financial Statements for carrier and related parties • Outline of Business Structure • Supporting Documents • Independent Audit Report • Statutory Declaration – Management Certification

  28. 2011-12 Reporting ERR Form • Eight sheets – incorporates related party percentage formulae • Prepare ERR Form in accordance with relevant Australian Accounting Standards • whole Australian dollars (AUD$) and English • exclusive of GST

  29. 2011-12 Reporting Calculating Eligible Revenue • Initial sales revenue • Less Non-telco sales revenue and revenue earned whilst not a licence holder = • Gross telecommunications sales revenue • Less Deductions: • Overseas Activities and Acts in Australia for services outside Australia • Customer equipment • Content services • Exempt base station • Infrastructure revenue • Inter-Person Input Payments

  30. 2011-12 Reporting What is telecommunications revenue? • Revenue earned from the telecommunications industry from carrying on business as a carrier or carriage service provider, or...

  31. 2011-12 Reporting What is telecommunications revenue? … supply goods or services for use in connection with the supply of a listed carriage service; supply a content service using a listed carriage service; manufacture or import customer equipment or customer cabling; or install, maintain, operate or provide access to: (i) a telecommunications network; or (ii) a facility; used to supply a listed carriage service.

  32. 2011-12 Audit Requirements Audit report on return An eligible revenue return given to the ACMA under section 20 must be accompanied by a report of an approved auditor that: • is in a form approved in writing by the ACMA; … This is the ACMA independent audit report template published for the relevant year on the: ACMA Eligible Revenue Portal

  33. 2011-12 Audit Requirements Approved auditor • Subsection 8F(1) of TCPSS Act – meaning of approved auditor: A reference in this Part to an approved auditor is a reference to a person included in a class of persons specified in a written determination made by the ACMA for the purposes of this section

  34. 2011-12 Audit Requirements Approved auditor Telecommunications (Approved Auditor) Determination 2010 specifies the following as approved auditors: 1. Registered auditors under Part 9.2 of the Corporations Act 2001 • Authorised audit companies registered under Part 9.2A of the Corporations Act • Auditors-General Find an approved auditor or check approved auditor status by using the professional registers on the ASIC website: http://www.search.asic.gov.au/pro.html

  35. 2011-12 Reporting Audit Report on Return - s20D TCPSS Act The approved auditor must provide an audit opinion on the complete Return, not only the ERR Form Only exception is where an audit waiver or a conditional audit waiver has been granted by the ACMA.

  36. 2011-12 Reporting Requesting an Audit Waiver (may be a conditional audit waiver) • Applies to only one eligible revenue period • Request prior to lodging all other documents in an Eligible Revenue Submission • Audit waiver is more likely to be approved where: • other sufficient and appropriate evidence is provided • when carrier did not hold the licence for the full eligible revenue period • no significant errors in prior period returns • administrative expense is prohibitive for carrier compared to expected revenue from telecommunications activity in Australia

  37. 2011-12 Audit Requirements Other Reports from Auditors-based on conditional audit waiver • Limited subject matter audit reports • Agreed upon procedures reports • Review Reports • Client may need to provide methodology for revenue recognition to the ACMA • Early contact with the ACMA Revenue Assurance Section recommended

  38. 2011-12 Audit Requirements Single Point of Contact for Audit • Specific carrier representation – use ACMA contact form • Personnel nominated as point of contact for the ACMA and the carrier for: • Notification of general issues • Discussion regarding the form of the audit report

  39. Tools • First stop: ACMA Eligible Revenue Portal • Future information sessions where there is interest • ACMA Revenue Assurance Section Email: uso@acma.gov.auPh: 61 02 6219 5355

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