B. Method for allocating costs to the different areas

5. The allocation of costs takes place in 2 stages:

a) Stage 1: Analysis and allocation of accounting expenditure related to processes/activities/regulation areas/entities outside ICP-ANACOM.

b) Stage 2: Allocation of expenditure to the different types of activity according to the acts underlying article 105 of Law No 5/2004, and related to sectors outside the scope of the Electronic Communications Law.

Figure 2: Stages of ICP-ANACOM’s cost allocation method

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

6. First, expenditure is listed by groups and by department according to the following classification:

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

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

c) Expenditure related to cooperation and levy - ICP-ANACOM's specific cooperation and representation expenditure.

7. Second, expenditure is 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. By way of example, we briefly present the sequence of movements for expenditure classification:

a) Listing of total accounting expenditure by nature and by department.

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

c) Staff costs³ are directly allocated 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) Expenditure on travelling abroad, travelling within Portugal, advertising, specialized works, honoraria, training, documentation, meetings and sponsorships are directly related to the processes/services/clients, based on case-by-case relations, without prejudice to an irrelevant part being distributed according to the Man-Hours (MH) criterion.

e)  Expenditure on electricity, water, air conditioning, rents of the head office facilities, installation insurance, elevators, cleaning, surveillance and security services costs are considered structure costs and are distributed according to the m2 used by each department. The remaining functioning expenditure, namely those related to economat, reprographics and communications, is distributed among all departments, according to their consumption⁴.

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

g) Depreciation and amortisation expenditure of a relevant amount is associated with the work processes related to equipment, computer applications and hardware⁷, the remaining part being distributed by 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 expenditure, for which a cause-effect relation may not be established, is distributed according to their relative cost or to MH.

9. It is important to stress 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 regulation area, cutting across all areas⁹. For this reason, expenditure related to these work processes is redistributed to all operational processes, based on the criteria of relative costs or MH.

Phase 2 - Allocation of expenditure to the regulation sectors within the Electronic Communications Law

10. In order to ensure a correct allocation of accounting expenditure, by each regulation sector and within the scope of electronic communications, and by act broken down in paragraph 1 of article 105 of Law No 5/2004, a process was developed which enables this distribution, and which is identified as ''type of activity''.

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

12. The allocation of expenditure related to each type of activity follows the following process:

a) Identification of the amount of expenditure by item of type of activity (spectrum management activities, numbering management activities, regulation activities, and others).

b) Distribution of the amount of common costs (common accounting expenditure) and cooperation/levy costs by regulation item, considering one of the following options as a distribution criterion, bearing in mind the type of common/cooperation expenditure:

i ) Direct allocation to the corresponding item of type of activity through cause-effect relation.

ii ) Proportion of expenditure directly associated to each item of type of activity.

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

c) Afterwards, after determining the expenditure by each item of type of activity, the expenditure allocated to ''all activities'' of regulation is distributed among the following regulation sectors:

i ) Electronic Communications Sector;

ii ) Postal Sector;

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

13. Subsequently, the costs determined at the level of the Electronic Communications Sector are distributed among acts defined in paragraphs a) to d) of article 105 of the Electronic Communications Law.