B. Methodology for allocating costs to different areas

5. Costs are allocated according to 2 phases:

a) Phase 1: Analysis and allocation of the administrative costs to the  processes/activities/regulation areas/entities outside ICP-ANACOM.

b) Phase 2: Allocation of the administrative costs to the different types of activity  according to the acts underlying article 105 of Law No 5/2004 and to activities  associated with sectors outside the scope of the Electronic Communications Law.

Figure 2: Phases of the Method for allocation of costs of ICP-ANACOM

(Click to enlarge image)

Phase 1: Analysis and allocation of accounting costs to ICP-ANACOM's processes/activities

6. First, costs are listed by groups and by department according to the following classification:

a)  Direct resources - costs directly related to regulation services, through a cause-effect relation.

b)  Indirect/common costs - costs not directly related to regulation services.

c)  Expenses associated with cooperation and contributions - specific expenses incurred as a result of cooperation and representation by ICP-ANACOM.

7. Secondly, costs are allocated to processes/activities in a direct way or through criteria that represent a cause-effect relation between the nature of the expense and the process (processes) it supports.

8. As an example, we briefly present the steps taken to classify costs:

a) Grouping of total accounting costs by nature and by department.

b) Classification of costs according to the structure of the work processes in force, regulated and non-regulated areas (services), and external entities (clients). Analysis and allocation of costs to the processes¹/services and costing objects/clients of ICP-ANACOM².

c) Staff costs³ are allocated directly to the processes/services and costing objects/clients of ICP-ANACOM, according to the report made by all employees on a computer application "Reporte de Horas de Trabalho (RHT)" (Working Hours Report).

d) Costs incurred as a result of travelling abroad, travelling within Portugal, advertising, specialized works, professional fees, training, documentation, meetings and sponsorships are directly associated with the processes/services/clients, on a case by case basis, without prejudice to an irrelevant part thereof being distributed according to Man-Hours (MH).

e) Electricity, water, air conditioning, rents of the head office premises, property insurance, elevators, cleaning, surveillance and security services costs are considered as structural costs and are distributed according to the area in m2 used by each department. Remaining operating costs, notably those related to stationery, reprography and communications are distributed between all departments, according to their consumption⁴.

f) Costs related to cooperation and contributions/levies⁵ are distributed according to the nature of the activity⁶.

g) Depreciation and amortisation costs, where of a relevant amount, are associated with the work processes related to equipment, IT applications and hardware⁷, and the remaining part is distributed according to MH.

h) Provisions are treated similarly to common costs, being allocated to the several types of activity, according to the kind of provision⁸.

i) Other costs, for which a cause-effect relation may not be established, are distributed according to their relative cost or to MH.

9. It is important to note that certain work processes, such as "Planning and Control", "Financial System", "General Services" and "Human Resources" do not have a direct relation to a specific area of regulation, cutting across all areas⁹. As such, costs related to these work processes are redistributed among all operational processes based on criteria of relative costs or MH.

Phase 2 - Allocation of costs to the sectors of regulation pursuant to the Electronic Communications Law

10. In order to ensure a proper allocation of costs, by each sector of regulation and within the scope of electronic communications, by action detailed in paragraph 1 of article 105 of Law No 5/2004, a process was developed which enables the distribution of costs, and which is identified as "type of activity".

11. The type of activity is identified according to a combination - work process/regulated area (services)/external entity (client)¹⁰. Each type of activity corresponds to a given set of combinations¹¹.

12. The allocation of costs related to each type of activity follows the process below:

a) Identification of the amount of direct costs by type of activity block (spectrum management activities, numbering management activities, regulation activities, and others).

b)  Distribution of the amount of common costs (common accounting costs) of the amount of cooperation/contribution costs by regulation block, considering one of the following options as a distribution criterion, in light of the type of common/cooperation cost:

i)  Direct allocation to the corresponding block of type of activity using the cause-effect relation.

ii)  Proportion of costs directly associated to each type of activity block.

iii) Proportion of MH allocated to each type of activity block.

c)  Subsequently, after determining costs by each type of activity block, the costs allocated to "all activities" of regulation are distributed among the following sectors of regulation:

i)  Electronic Communications Sector;

ii)   Postal Sector;

iii)  Other sectors outside the scope of the Electronic Communications Law.

13. Subsequently, costs calculated for the Electronic Communications Sector are distributed according to the actions defined in points a) to d) of paragraph 1 of article 105 of the Electronic Communications Law.