Part 32 Uniform System of Accounts 3060-1247
September 2020
This submission is being made pursuant to 44 U.S.C. § 3507 of the Paperwork Reduction Act of 1995 to revise this collection.
SUPPORTING STATEMENT
Justification:
Circumstances that make the collection necessary:
Section 220 of the Communications Act of 1934, as amended (Act), requires the Commission (FCC) to prescribe a uniform system of accounts (USOA) for use by telephone companies.1 Part 32 of the Commission’s rules implements the requirements of section 220.2 The USOA is an historical financial accounting system that, among other things, prescribes a chart of accounts and directs telephone companies how to record certain transactions in their books of account.3 While the USOA employs generally accepted accounting principles (GAAP) for many accounting entries,4 it requires telephone companies to maintain a chart of accounts and to comply with specific accounting requirements for certain regulatory purposes. This has required incumbent telephone companies to maintain separate financial and regulatory books.
On February 24, 2017, the Commission released the Part 32 Order that minimizes the compliance burdens imposed by the USOA on price cap and rate-of-return telephone companies, while ensuring that the FCC retains access to the information it needs to fulfill its regulatory duties.5
The Commission consolidated Class A and Class B accounts by eliminating the current classification of carriers, which divides incumbent LECs into two classes for accounting purposes based on annual revenues.6 Carriers subject to Part 32’s USOA will now only be required to keep Class B accounts.
The Commission concluded that price cap carriers may elect to use GAAP for all regulatory accounting purposes if they:
establish an “Implementation Rate Difference,” which is the difference between pole attachment rates calculated under Part 32 and under GAAP as of the last full year preceding the carrier’s initial opting out of Part 32 accounting requirements; and
adjust their annually-computed GAAP-based pole attachment rates by the Implementation Rate Difference for a period of 12 years after the election.
Alternatively, price cap carriers may elect to use GAAP accounting for all purposes other than those associated with pole attachment rates and continue to use the Part 32 accounts and procedures applicable to pole attachment rates for up to 12 years. Price cap carriers would move to setting pole attachment rates under GAAP for the remaining portion of the 12 years after choosing to move to GAAP accounting,7 using the Implementation Rate Difference approach.
The Commission determined that a price cap carrier may be required to submit pole attachment accounting data to the Commission for three years following the effective date of the rule permitting a price cap carrier to elect GAAP accounting. If a pole attacher informs the Commission of a suspected problem with pole attachment rates, the Commission will require the price cap carrier to file its pole attachment data for the state in question. This requirement may be extended for an additional three years, if necessary.
In addition, the Commission reduced the accounting requirements for telephone companies with a continuing obligation to comply with Part 32 in the following areas:
Telephone companies may carry an asset at its purchase price when it was acquired, even if its value has increased or declined when it goes into regulated service.
Telephone companies may reprice an asset at market value after a merger or acquisition consistent with GAAP.
Telephone companies may use GAAP principles to determine Allowance-for-Funds-Used-During-Construction; and
Telephone companies may employ the GAAP standard of materiality. Rate-of-return carriers receiving cost-based support must determine materiality consistent with the general materiality guidelines promulgated by the Auditing Standards Board.
Price cap carriers with a continuing Part 32 accounting obligation must maintain continuing property records necessary to track substantial assets and investments in an accurate, auditable manner. Price cap carriers must make such property information available to the Commission upon request.
Finally, the Commission stated that carriers with a continuing Part 32 obligation must continue to comply with the USOA’s depreciation procedures and its rules for cost of removal-and-salvage accounting.
On April 20, 2017, the Commission adopted the Business Data Services Order, reforming the business data services regulations for incumbent price cap LECs and competitive carriers.8 Among other things, the Commission removed unnecessary regulations on price cap business data services where competition exists while retaining regulation in circumstances without such competition.
On October 24, 2018, the Commission released the Rate-of-Return Business Data Services Report and Order, allowing rate-of-return carriers currently receiving model-based or other fixed high-cost support to voluntarily elect to transition their business data services offerings from rate-of-return to incentive regulation.9 As a result, electing carriers that choose to use GAAP instead of the USOA are relieved of virtually all of the filing and record keeping requirements of the USOA with the sole exception of the same data provisioning requirements for the calculation of pole attachment rates as price cap carriers, which are covered under this collection.
This information collection does not affect individuals or households; thus, there are no impacts under the Privacy Act.
Statutory authority for this information collection is contained in sections 10, 201, 219-220, 224, and 403 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 160, 201, 219-220, 224, and 403.
The information collection requirements set forth below ensure that the Commission has access to the information it needs to fulfill its regulatory duties while minimizing the burden on carriers.
The Commission believes that the respondents use automation and advanced information technology systems in complying with these information requirements. Carriers should file their information electronically.
There is no other existing information that would serve our regulatory purposes.
This collection has been carefully designed to minimize the burden on all carriers, regardless of size.
Without this information, the Commission would be unable to fulfill its regulatory responsibilities under the Act.
No other special circumstances will apply to these information requirements.
The Commission published a 60-day Notice in the Federal Register seeking public comment on July 22, 2020 (85 FR 44298). No comments were received as a result of this notice.
The Commission does not anticipate providing any payment or gift to respondents.
If respondents
submit information that they believe is confidential, they may
request confidential treatment of such information pursuant to
section 0.459 of the Commission’s rules, 47 C.F.R. §
0.459.
There are no questions of a sensitive nature with respect to this information collection.
The following represents the estimated number of burden hours for this information collection, reflecting the additional costs imposed by Part 32 above those associated with GAAP. We note that the hourly burden imposed by the requirement is very difficult to quantify. The following represents our best estimate.
The information collection requirements are as follows:
Reporting Requirement for IRD for Pole Attachments:
Number of respondents: 11 ILECs.
Frequency of response: On occasion reporting requirement.
Total number of responses annually: Approximately 60.
Estimated time per response: 20 hours.
Total annual burden: 13,200 hours.
11 Respondents x 20 hours x approximately 60 responses per year = 13,200 hours.
Total estimate of “in-house” cost to respondents: $618,816.
Explanation of calculation:
The Commission estimates that respondents will use personnel comparable in pay to a GS 12/ Step 5 employee earning $46.88 per hour. Thus:
13,200 hours x $46.88 = $618,816.
Recordkeeping Requirements for price cap ILECs electing GAAP with Part 32 For Pole Attachments:
Number of respondents: 1 ILEC.
Frequency of response: Annual reporting requirement.
The respondent will calculate its pole attachment rates using Part 32 requirements for each state in which it operates where state commissions do not regulate pole attachment rates.
Total number of responses: Approximately 10.
The Commission estimates that the respondent operates in approximately 10 states.
Estimated time per response: Approximately 40 hours.
Total annual burden: 400 hours.
1 respondent x 40 hours x approximately 10 responses = 400 hours.
Total estimate of “in-house” cost to respondents: $18,752.
Explanation of calculation:
The Commission estimates that respondents will use personnel comparable in pay to a GS 12/Step 5 employee earning $46.88 per hour. Thus:
400 hours x $46.88 = $18,752.
Recordkeeping Requirement for Additional Burdens of Part 32 Over GAAP-- Depreciation, Cost of Removal and Salvage, etc.:
Number of respondents: 937 ILECs.10
Frequency of response: On occasion and annual reporting requirements.
Carriers must continue to comply with the Part 32 requirements applicable to depreciation, cost of removal, and salvage accounting.
Total number of responses annually: 937 ILECs.
Estimated time per response: Approximately 30 hours on average.
Total annual burden: 28,110.
937 respondents x 30 hours x approximately 1 response per year = 28,110 hours.
Total estimate of “in-house” cost to respondents: $1,317,796.80.
Explanation of calculation:
The Commission estimates that respondents will use personnel comparable in pay to a GS 12/Step 5 employee earning $46.88 per hour. Thus:
28,110 hours x $46.88 = $1,317,796.80.
Rate-of-Return Carrier Continuing Property Records Recordkeeping Requirement:
Number of respondents: 937 ILECs.
Frequency of response: On occasion and annual reporting requirements.
The Commission estimates that approximately respondents will be required to maintain property records necessary to track substantial assets and investments, to make such property information available to the Commission upon request, and to ensure the maintenance of such data.
Total number of responses annually: 937.
Estimated time per response: Approximately 30 hours on average.
Total annual burden: 28,110 hours.
937 respondents x 30 hours per response x 1 response per year = 28,100 hours.
Total estimate of “in house” costs to respondents: $1,317,796.80.
Explanation of calculation:
The Commission estimates that respondents will use personnel comparable in pay to a GS 12/Step 5 employee earning $46.88 per hour. Thus:
28,110 hours x $46.88/hour = $1,317,796.80.
Summary:
Total Number of Respondents: 11 + 1 + 937 = 949.
Total Number of Responses Annually: 60 + 10 + 937 + 937 = 1,944.
Total Annual Burden Hours: 13,200 + 400 + 28,110 + 28,110 = 69,820.
Total “In-House” Costs: $618,816 + $18,752 + $1,317,796.80 + $1,317,796.80 = $3,273,161.60.
The following represents the Commission’s estimate of the annual cost burden for respondents resulting from the information collection:
Total capital and start-up cost component (annualized over its expected useful life): $0.
Total operations and maintenance and purchase of services component: $0.
There will be no cost to the federal government.
The Commission is reporting program changes to this information collection. First, we have removed the one-time recordkeeping requirements for price cap LECs electing GAAP with an Incremental Rate Difference, as those requirements have been fulfilled. Second, the number of ILECs required to respond to information requirements 12(C) and (D) has decreased by 227, from 1,164 to 937. There are 227 rate-of-return study areas that have elected incentive regulation and/or GAAP, and thus, pursuant to the Rate-of-Return Business Data Services Report and Order, the carriers are relieved of virtually all of the recordkeeping requirements of the USOA, including those set forth in 12(C) and (D).
As a result of these changes, the total number of respondents has decreased from 1,176 to 949 (-227). The total number of responses decreased from 2,458 to 1,944 (-514) and the total annual burden hours decreased from 103,240 hours to 69,820 hours (-33,420).
There are no adjustments being reporting to this collection.
The Commission does not anticipate that it will publish any of the information collected.
The Commission does not seek approval not to display the expiration date for OMB approval of the information collection.
There are no exceptions to the certification statement.
B. Collections of Information Employing Statistical Methods:
This information collection does not employ any statistical methods.
1 See 47 U.S.C. § 220.
2 See 47 CFR Part 32; Revision of the Uniform System of Accounts and Financial Reporting Requirements for Class A and Class B Telephone Companies (Parts 31, 33, 42, and 43 of the FCC’s Rules), CC Docket No. 78-196, Report and Order, 60 Rad. Reg. 2d (P&F) 1111, para. 2 (1986).
3 The USOA also establishes rules for a carrier’s affiliate transactions and prescribes the accounting treatment for depreciation expenses. In addition, the USOA requires carriers to maintain property records of all telecommunications plant in service.
4 GAAP is that common set of accounting concepts, standards, procedures and conventions which are recognized by the accounting profession as a whole and upon which most nonregulated enterprises base their external financial statements and reports.
5 Comprehensive Review of the Part 32 Uniform System of Accounts; Jurisdictional Separations and Referral to the Federal-State Joint Board, Report and Order, 32 FCC Rcd 1735 (2017) (Part 32 Order).
6 See 47 CFR § 32.11(b). Rate-of-return carriers do not currently qualify as Class A carriers and thus are not required to keep Class A accounts.
7 See Part 32 Order, 32 FCC Rd at 1747, para. 39.
8 Business Data Services in an Internet Protocol Environment et al., WC Docket 16-143, Report and Order, 32 FCC Rcd 3459 (2017) (Business Data Services Order).
9 Regulation of Business Data Services for Rate-of-Return Local Exchange Carriers et al., WC Docket Nos. 17-144 et al., Report and Order, Second Further Notice of Proposed Rulemaking, and Further Notice of Proposed Rulemaking, 33 FCC Rcd 10403 (2018) (Rate-of-Return Business Data Services Order).
10 Since this collection was established, 227 rate-of-return study areas have elected incentive regulation and/or GAAP.
| File Type | application/vnd.openxmlformats-officedocument.wordprocessingml.document |
| File Title | Orders TOC by Paragraph.dot |
| Author | Christopher Koves |
| File Modified | 0000-00-00 |
| File Created | 2021-01-13 |