The financial statements were prepared on the pretext of operational continuity, based on accounting records and books kept by ICP-ANACOM according to accounting principles generally accepted in Portugal, taking into account the circumstances described in note 3 n).
The main accounting principles used to prepare the financial statements were as follows:
a) Tangible fixed assets
The tangible fixed assets transferred from the former CTT (postal service) and those directly acquired by ICP-ANACOM by 31 December 1992 are registered at acquisition cost, assessed according to the legal provisions (note 12), based on official monetary devaluation coefficients. Remaining fixed assets are recorded at cost of acquisition.
Amortisations are calculated using the straight-line method, from the beginning of the year of acquisition or use.
The amortisation rates generally used were as follows:
| Amortisation rates | Rates (percentage) |
|---|---|
| Buildings and other constructions | 2 - 10 |
| Basic equipment | 10 - 20 |
| Transport equipment | 14,28 - 25 |
| Tools and utensils | 25 |
| Administrative equipment | 10 - 25 |
| Other tangible fixed assets | 10 - 33,33 |
Fixed assets in progress, as well as land and philatelic property, are not subject to amortisation.
The rates set in Regulatory Decree no. 2/90 of 12 January are applied to all the fixed assets acquired by ICP-ANACOM and transferred from the ex-CTT.
b) Specialisation of financial years
Except for what is mentioned in note 3 n), ICP-ANACOM?s income and spending are registered according to the principle of period specialisation and are thus recorded when generated, regardless of the time of receipt or payment. Differences between sums received or paid out and the corresponding income or expenditure generated are registered under accruals and deferrals (note 48).
c) Fees for the use of radio spectrum
Fees for the use of radio spectrum are posted in the respective financial year, according to the following rules:
- Decree-Law no. 151-A/2000 of 20 July sets out the regime applicable to the licensing of radiocommunication networks and stations and to the supervision of said stations and the use of radio spectrum. It also sets out the principles applicable to radio fees, protection from exposure to electromagnetic radiation and the sharing of radiocommunications infrastructures;
- Administrative Rules nos. 144-A/2003 of 10 February and 1076/2003 of 29 September set the applicable rates for radiocommunications, including the annual rates for the use of each frequency bloc allocated for fixed wireless access (FWA);
- Decree-Law no. 5/95 of 17 January approved the amateur radiocommunications regulation, whose rates are set in Administrative Rule no. 462/98 of 30 July.
The National Civil Protection Service, the civil protection agents mentioned in paragraphs a) and e) of sections 1 and 2 of article 18 of Law 113/91 of 29 August (basic civil protection law), as well as other entities that deal with fire fighting, vigilance, detection and prevention, benefit from rates reduction (section 5 of article 19 of Decree-Law no. 151-A/2000 of 20 July). Council of Ministers Resolution no. 23/98 of 12 February lists the entities covered by the said decree-law; Administrative Rule no. 144-A/2003 of 10 February set the said rates reduction at 70%.
d) Fees for the activity of telecommunications operators
Decree-Law 381-A/97 of 30 December regulates access by telecom network operators and public telecom services as per Law no. 91/97 of 1 August (Basic Telecommunications Law). It also transposes Directives 96/2/EC and 96/19/EC, both of the Commission, and 97/13/EC, of the European Parliament and of the European Council, into internal law.
Order no. 1230/99 (2nd series) of the Ministry of Infrastructure, Planning and Territorial Administration, published on 25 January, sets the value of fees to be charged by ICP-ANACOM for the activity of such service providers.
e) Fees for the activity of postal service operators
Decree-Law no. 150/2001 of 7 May sets out the regime for the access and exercise of the activity of provider of postal services operated in competition.
Order no. 21.080/2001 of the Infrastructure Ministry, published on 10 October, sets the value of fees to be covered by ICP-ANACOM for the activity of these service providers.
f) Surcharges and back interest
Failure to pay the fees mentioned in paragraph c) above within the stipulated deadlines leads to the application of back interest and surcharges, a legal imposition to which ICP-ANACOM is bound.
As with other State organisations, with regard to this very specific matter ICP-ANACOM only posts this income when actually received.
g) Registration and licensing fees
Due to their significance it is also worth outlining other principles that determine the application of rates considered as revenue for ICP-ANACOM:
- Decree-Law no. 47/2000 of 24 March determines the legal framework applicable for the use of Personal Radio Service - Citizen?s Band (PRS-CB), whose rates are set in Administrative Rule no. 329/2000 of 9 June;
- Decree-Law no. 59/2000 of 19 April determines the legal framework for the installation of telecommunications infrastructure in buildings and their connections to public telecommunications networks, as well as the regime for the certification of installations and the assessment of equipment, materials and infrastructure conformity, whose rates are set in Infrastructure Ministry Order no. 13.877/2000, published on 7 July.
h) Fines to receive
Most current legislation applicable to telecom operators provides for disciplinary action and the application of fines whenever existing rules are broken.
In this respect, as is the case with other State bodies regarding this very specific matter, ICP-ANACOM only posts this income when it is actually received.
i) Debts of doubtful recovery
In view of the ICP-ANACOM's specific characteristics and the nature of most of its invoicing (fees covered in advance) the following general criteria are applied to debts owed by clients:
Private individuals (non-professionals)
Once all steps for collection of fees have been taken (including the sending of a final warning letter) and the debts remain outstanding, then those sums are deemed to be bad debts and provisioned in their totality.
The adopted criterion is based on the fact that it is uncertain whether such customers will pay, as the equipment they possess is not meant for commercial or industrial use but rather for exclusive personal use.
Corporate bodies or private individuals (professionals) based in national territory
The terms under paragraph c) of section 1 of article 34 of the Corporate Income Tax (IRC) code were applied, i.e., credits outstanding for over 6 months since the date of the respective due date, where there is proof that steps were taken to collect the amount, were considered to be bad debts.
In these cases the open balances were provisioned according to the percentages set out in section 2 of article 34 of the CIRS. Exceptions are made for cases where the sums owed have been challenged or are in a similar situation, or where bankruptcy has been filed; these were provisioned in their totality.
Corporate bodies or private individuals (professionals) based abroad
Once all steps for fee collection have been taken (including the sending of a final warning letter) and the debts remain outstanding, then those sums are deemed to be bad debts and provisioned in their totality.
As effective coercive collection means are effectively out of ICP-ANACOM?s reach, contrary to the case of clients based in national territory, caution advises full provision of the debts.
State, local governments, autonomous regions
The terms under paragraph a) of section 3 of article 34 of the Corporate Income Tax Code were applied, i.e., the credits over the State, autonomous regions and local governments were not considered bad debts, so no provision was created to cover them.
In any case, the debts outstanding in litigation, challenged, under appeal or in bankruptcy, and others, in which there is a strong likelihood that debt will not be covered, for justifiable reasons, were provisioned in their totality.
j) Retirement pension responsibility
As explained in greater detail in note 31, ICP-ANACOM workers co-opted from the former CTT-Correios e Telecomunicações de Portugal were covered at the transfer date by the Retirement and Survival Pension Scheme in force at the latter company. Such employees maintained this right at the time of transfer, in keeping with the ICP-ANACOM statutes.
In order to estimate its liability for payment of the said pensions, ICP-ANACOM follows the procedure of annually obtaining updated actuarial studies drawn up by an independent body. It periodically makes transfers to the Fund set up with a specialised company to manage the value of its liability, and adjusts the respective value at the end of the year so as to fully cover its liability.
l) Healthcare responsibility
As outlined in greater detail in note 31, some ICP-ANACOM employees are not covered by social security benefits and healthcare schemes, as they are insured by the IOS-Instituto das Obras Sociais (Institute of Social Works) ? of the CTT, maintaining this right when they retired.
To estimate its responsibility, ICP-ANACOM follows the procedure of annually obtaining an updated actuarial study, drawn up by an independent body, based on which it adjusts the liability value at the end of the year.
m) Subsidies received to finance tangible fixed assets
The non-refundable subsidies granted to ICP-ANACOM in 1992 and 1996 to fund tangible fixed assets are registered as deferred operating incomes under accruals and deferrals, and recognised in the statement of results proportionally to amortisation of the subsidised tangible fixed assets.
n) Costs with special projects and protocols in the information society context
Costs with special projects in the information society context deriving from agreements signed by the government, or ICP-ANACOM on its behalf, and beneficiary entities are recorded in the statement of results for the financial year in which the respective payment was made (note 31).
o) Refurbishing work in rented buildings
The criterion followed determines that the costs of refurbishing work undertaken in leased buildings is posted for each financial year in the share of refurbishing work carried out in the buildings, as per the lease period envisaged in the respective contracts.
In the specific case of the ICP-ANACOM headquarters building, given that the five-year period envisaged in the rental contract has expired, with annual renewal now in force, and that no move to new premises is planned in the mid-term, a decision was made to consider the same number of years of useful life as per the rental contract signed at the end of 2002 in the adjacent building which houses some ICP-ANACOM services (five years).
p) Balances and transactions in foreign currency
All assets and liabilities expressed in foreign currency have been converted into euros, using the exchange rates in effect at 31 December 2003.
Exchange rate differences, both favourable and unfavourable, caused by differences between exchange rates at the date of transaction and those existing at the dates of collection, payment or at the date of the balance sheet, were registered as operating income and costs in the balance sheet for the financial year.
