12 October 2021
The African Advanced Level Telecommunications Institute (AFRALTI) will be conducting a 10 day course on Regulatory Accounting for Utility Regulations.
Regulatory accounting for utility regulations is an accounting system that demonstrates compliances with transparency, objectivity and non-discrimination obligations. Other compliances include anticompetitive behavior and systematic of disaggregation of costs, revenue, asset and liabilities against defined regulatory Markets and Services. These compliances enable National Regulatory Authorities (NRAs) to regulate diligently and prudently utilities that promotes effective competition and economic efficiency of the country. The compliances also enable Revenue Authorities to collect correctly corporate taxes, because the regulatory accounting system discloses cost information. The cost information is used to calculate the corporate taxes from the net profit. The net profit is revenue less the costs.
Until the late 1980s, most of the governments around the world owned and operated the utilities on monopoly basis such as telecommunications, broadcasting, electricity, gas and water. The state owned monopoly utilities used to prepare and submit the state government audited and consolidated accounts for their business operations. Normally, the audited and consolidated accounts are not transparent and objective; they do not disaggregate the costs, revenues, assets and liabilities against defined regulatory Markets and Services. However, the audited and consolidated accounts worked well during the monopoly era because there was no competition, and the state owned utilities were funded fully by the state government.
In mid-1995, reform of the utilities took place in most of the countries around the world. This reform liberalized markets of the utilities and brought them up to competition. The reform brought more new entrants and entered into the markets. The new entrants increased competition and would like to know the costs of accessing the existing utilities. Knowing the costs for accessing the existing utilities became a big problem due to lack of the regulatory accounting system. The regulatory accounting system for the utility regulations solves the problem of knowing the costs for accessing the existing utilities by the new entrants. However, the liberalized and competitive utilities such as Mobile Network Operators (MNOs) are still preparing and submitting the NRAs and state governments the legacy audited and consolidated accounts, which are subjective. As a result the governments and NRAs continue collecting incorrect amount of the corporate taxes and regulatory dues respectively.
National Regulatory Authorities; Revenue Authorities; Accountants; Engineers; Economists; Financial Analysts; Ministry of Finance; Ministry of Communications; and other government policy makers.
Basic knowledge of finance, accounting, economics, engineering and utility regulations.
The reform of the utilities in the mid-1995 from a government-led to a private-sector-led one was a new and complex phenomenon that requires deep understanding of concepts of the competition, costing and pricing of the utilities. Unless the governments and regulators understand well the concepts of the reform, it will be difficult for them to regulate diligently and prudently the reformed utilities in terms of the compliances with the transparency, objectivity, non-discrimination obligations, anticompetitive behavior and systematic of disaggregation of the costs, revenue, assets and liabilities against defined regulatory Markets and Services.
At the end of the course, participants will have knowledge of competition and regulatory accounting for the utility regulations, which will help them to prepare and analyze the regulatory accounts. The knowledge for the regulatory accounting for the utility regulations is needed to promote effective competition and economic efficiency of the country.
- Understand well legal and regulatory requirements for the regulatory accounting system;
- Identify, define and analyse markets and services of the utilities;
- Determine Significant Market Power (SMP) utility;
- Understand concepts of accounting separation and cost accounting;
- Get knowledge in preparing Current Cost Accounting (CCA) Financial Statements;
- Get knowledge of accounting cost models; and
- Analyse Top-down and Bottom-up cost models.
The workshop includes presentations by the facilitator, country presentations and interactive sessions.