Assessing compliance with the Accounting Direction
Project experience | Regulation and policy
An Post, a major commercial organisation in Ireland providing a wide range of services including postal, communication, retail and financial services, was required to conduct two major activities in order to supply regulatory accounts to ComReg. First, revenue-derived traffic was used in the accounts, based on real mail sampling. Second, cost allocation rules were being applied in the preparation of fully allocated activity-based cost accounts.
These accounts needed to comply with the 2009 Accounting Direction, which had previously been established by ComReg. ComReg needed assurance that these two activities were being carried out appropriately and in compliance with the regulations.
Our first task was to investigate the real mail sampling carried out by An Post. We reviewed the design, plans, procedure and implementation of the sampling, and investigated issues in the accuracy and performance of the data obtained – ultimately used in the revenue-derived traffic calculations for the regulatory accounts.
Our second task was to review the detailed ABC and FAC models used in the regulatory accounts, and to assess compliance and provide recommendations on the accounts when compared with the Accounting Direction.
Our third task was to assess operational volume measurements and to set out improvements in the reconciliation of different volume measures.
Our detailed investigation into statistical and sampling issues, on-site observations of sampling and operational volume measurements, and detailed investigation into cost accounting rules and allocation factors identified a number of issues.
Our report contained fully documented recommendations, which the regulator was able to use for ongoing engagement with the postal operator.