First Schedule — POSTAL SERVICES ACT

(Article 23)

Accounting procedures

1. Subject to article 23 of this Act and in accordance with any directives as the

Authority may issue, the universal service provider or providers shall keep separate

accounts within their accounting system, for each of the services and products which

are part of the universal service on the one hand and those which are not on the other.

Such internal accounting system shall operate on the basis of consistently applied

and objectively justifiable cost accounting principles.

2. The accounting system referred to in paragraph 1 shall, without prejudice to

paragraph 3, allocate costs in the following manner

(a) costs which can be directly assigned to a particular service shall be so

assigned;

(b) common costs, that is costs that cannot be directly assigned to a

particular service, shall be allocated as follows

(i)

whenever possible, common costs shall be allocated on the basis

of direct analysis of the origin of the costs themselves;

(ii) when direct analysis is not possible, common cost categories shall

be allocated on the basis of an indirect linkage to another cost

category or group of cost categories for which a direct assignment

or allocation is possible; the indirect linkage shall be based on

comparable cost structures;

(iii) when neither direct nor indirect measures of cost allocation can be

found, the cost category shall be allocated on the basis of a

general allocator computed by using the ratio of all expenses

directly or indirectly assigned or allocated, on the one hand, to

each of the universal services and on the other hand, to the other

services;

(iv) common costs, which are necessary for the provision of both

universal services and non-universal services, shall be allocated

appropriately; the same cost drivers must be applied to both

universal services and non-universal services.

3. Other cost accounting systems may be applied only if they are compatible

with paragraph 1 and have been approved in advance in writing by the Authority.

4. The universal service provider shall comply with one of the cost accounting

systems described in paragraphs 1 and 2 which shall be verified by auditors

independent of the provider and the expense of such auditors shall be paid by the

provider. The provider shall publish a statement concerning compliance in two daily

newspapers at least once every calendar year.

5. The Authority shall keep available, to an adequate level of detail,

information on the cost accounting systems applied by the universal service

6. The Authority may request the universal service provider to provide, in

POSTAL SERVICES

confidence, detailed accounting information arising from such cost accounting

7. The Authority may require postal service providers which are obliged to

contribute to a compensation fund to introduce an appropriate accounting separation

to ensure the functioning of the fund.

8. The financial accounts of the universal service provider shall be drawn up,

submitted to audit by an independent auditor and published by the provider in

accordance with the relevant Community and Maltese law relating to commercial

undertakings.

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