Chapter 1 General Provisions
These regulations are promulgated according to Paragraph 3, Article 44 of the Cable Radio and Television Act.
The terms used in these regulations shall be defined as follows:
Lease-channel business: indicates a system operator who engages in the business of leasing its available channels and collects the rent thereof.
Lease-circuit business: indicates a system operator who engages in the business of leasing its network transmission line equipment, which shall have no exchange functions, and its auxiliary equipments and collects the rent thereof.
The system operator shall draft the accounting system according to these regulations, report that system to the central governing authority for future reference, and simultaneously inform the special municipal or county/city government.
When there is any amendment to the accounting system of the system operator, the system operator shall report to the central governing authority within thirty (30) days after the amendment, and simultaneously inform the special municipal or county/city government.
Chapter 2 Accounting Systems
The accounting duration shall adopt the calendar year as its financial year. However, if there are any special needs in operation, and it has been approved by the central governing authority, such limitation shall be exempted.
The accounting basis of the system operator shall be on the accrual basis.
The accrual basis referred to in the previous paragraph denotes that the revenue shall be recognized as such when the system operator becomes eligible to collect it and that the expense shall also be recognized as such when the system operator becomes liable to pay it, then these would be immediately recorded. At the time of closing, revenues and expenses shall be attributed to their fiscal year through the adjustment of the entries.
The “eligible to collect” in the previous paragraph shall refer to the compliance of the supplied goods or service with the following situation:
Has been realized or to be realized.
Has been earned.
Operating costs and individual expenses of the system operator shall match with the operating revenue obtained and collectively recognized in the same accounting duration. If the revenue has been realized and the relevant expense has not happened, they shall be estimated and recognized in a reasonable way; if the expense has happened, and the economic effectiveness has not be exhausted, it shall be listed as a prepaid payment.
The accounting system’s content of the system operator shall be as follows:
A general description of the accounting system.
Journals and ledgers.
The set-up and usage of the accounting items, accounting documents, accounting books and accounting reports.
Standards and procedures of general accounting.
Standards and procedures of cost accounting.
The relevant procedures or regulations concerning the sales, purchases, collections, and payments which are necessary for management
Other necessary items.
The general description of the system operator’s accounting system shall include the meaning, purpose, implementation range, and main points of the content.
The journals and ledgers of the system operator’s accounting system shall summarize the original documents, accounting documents, journal book, general ledger, subsidiary ledger, necessary auxiliary book, and all types of the various accounting reports (including detail tables), and explain their interrelationships.
The journals and ledgers system in the previous paragraph shall be explained by the journals and ledgers chart.
The accounting items of the system operator’s accounting system shall explain the contents, installation, classification, and numbering principles.
The rules governing the installation of the accounting items in the system operator’s accounting system shall be promulgated by the central governing authority.
If any accounting event of the system operator occurs, the accounting documents which are evidential shall be obtained, given, or drafted.
The rules governing the installation and use of the accounting documents for the cable radio and television system operator shall be further promulgated by the central governing authority.
The accounting books in the system operator’s accounting system shall contain the journal book, general ledger, subsidiary ledger, subscribers’ ledger, inventory ledger, occupancy equipment ledger, fixed asset ledger, and other accounting books which are necessary for the business needs.
The accounting reports in the system operator’s accounting system shall contain the balance sheet, income statement, statement of change in shareholder equity, cash flow statement, and any remarks or attachments, and it shall be handled according to “the Regulations Governing the Preparation of Financial Reports by Securities Issuers.”
If the system operator uses the computer to handle the procedure in its accounting information, it shall be handled according to “the Rules Governing the Handling of Accounting Information in Electric Method in Business.”
The standards and procedures of general accounting of the system operator shall be handled by the generally accepted accounting standards issued by the Accounting Research and Development Foundation.
The standards and procedures of cost accounting of the system operator shall contain cost account items, documents, or certificates, procedure of cost accumulation, method of cost allocation, and cost accounting reports.
The adoption of the standards and procedures of cost accounting in the previous paragraph shall be the same in the previous and following years. If there are any changes, they shall be deemed as the revision of the accounting system.
Cost allocation and other relevant cost records shall be stored according to the relevant laws and regulations for the inspection of the central governing authority.
Chapter 3 Cost Pooling and Allocation
The system operator shall calculate the cost by the full cost method.
The full cost shall include the following items:
Operational cost of cable radio and television enterprise: shall refer to the operation cost which can be directly identified with the cable radio and television business, it also contains the transmission network component cost, supporting function cost, and general management function cost which can be directly identified with the cable radio and television business.
Transmission network component cost: shall refer to the subscriber lines, transmission, or other equipment cost related to the network operation which cannot be directly identified with the cable radio and television business.
Supporting function cost: shall refer to the relevant cost which cannot be cannot be directly identified with the cable radio and television business, but is necessary for providing subscription service or network supporting service in the operation of cable radio and television business.
General management function cost: shall refer to the relevant cost which is not directly related to the operation cable radio and television business, but is necessary for the function of the total operation for the cable radio and television business department.
The cost pooling and allocation shall be based on the actual cost.
The system operator may, depending on the need of the business and management, use the standard cost system. When using the standard cost system, the cost shall be accounted by the standard cost, the difference between the actual cost and the standard cost shall be properly adjusted. If there is a significant difference, the cost shall be allocated to the cost targets based on the original cost allocation ratio. The installation, revision, usage, and the difference treatment of standard cost system shall be set in writing.
The system operator may use activity-based cost system or other reasonable cost pooling and allocation system.
Cost allocation shall refer to the allocation of the cost to relevant cost targets.
The cost target shall refer to the cost of activity or event which shall be individually calculated.
The cost allocation shall be based on the causal relationship and the benefit level between the cost and cost target, and may be adjusted after the consideration of importance.
The system operator shall clearly set the division basis of direct cost and indirect cost, and divide the cost event based on this.
The direct cost shall refer to the cost which can be directly identified with the cost target, and there is obvious causal relationship between the cost and cost target, and the benefit level and the number of used resources could be clearly evaluated.
The indirect cost shall refer to the cost which cannot be directly identified with the cost target; they shall be pooled or allocated to the cost pool with homogeneity by their very nature, then be allocated to the cost target on a proper basis.
The cost pool in the previous paragraph shall refer to the joint account which individual cost events are pooled in, such as transmission network components cost, supporting function cost, or general management function cost, etc.
The cost pooled in the same cost pool shall be with homogeneity, the alleged homogeneity shall refer to the same or similar causal relationships or benefit levels between the cost and cost target.
The allocation of indirect cost shall consider the following bases:
1. The evaluation based on the inputted (activity) volume.
2. The evaluation based on the outputted volume.
If the inputted (activity) or outputted volume could not be physically evaluated, or the specific causal relationship or benefit level cannot be evaluated, the following reasonable alternative allocation bases shall be used:
1. The basis related to the materials.
2. The basis related to the human labors.
3. The basis related to the plant or equipment.
4. Other cost may use the business income and production amount or other similar bases.
The cost in paragraph 1 shall be allocated to all benefit business events, such as the subscriber’s subscription, lease-circuit business, lease-channel business, advertisements, etc.
When the indirect cost pools of service departments mutually provide service for each other, the cost allocation shall choose one of the following methods:
1. Cross-allocation method: the costs of service department shall be allocated to all departments, including the operation departments and service departments, it served based on the ratio of service which it had provided.
2. Step-allocation method: the costs of service department shall be allocated to all operation departments and service departments it served. However, when the cost of a certain service department has been fully allocated, that service department will no longer accept the costs directly or indirectly allocated from the succeeding service departments. The allocation order shall begin from the service department which provided most services or had the greater cost amount, and then allocates the rest step by step.
3. Direct allocation method: the costs of service departments shall be directly allocated to each operation department, the costs of each service department shall not be mutually allocated.
The service department in the previous paragraph shall refer to the departments that serve other departments, and have no direct connection to the labor or production and sale of the products; the operation departments shall refer to the departments directly engaged in the labor or production and sale of the products.
When the indirect cost allocation rate is used, the allocation standard shall be decided by the estimated volume of the cost and allocation bases and shall be set in writing. This standard shall be reviewed at least once a year and revised based on the actual needs.
When there is a significant difference between the actual indirect cost and allocated indirect cost, the difference shall be allocated to all cost targets based on the original allocation ratio.
Chapter 4 Financial Report and Disclosure
The financial reports of system operators shall refer to the financial statements, important detailed accounting items, attached table of standard forms, and other disclosure of events and explanation which is helpful to the decision of the user.
The system operator shall commission the certificated accountant to review the attached tables of standard form. When the certificated accountant is commissioned to review such attached tables, he/she shall conduct the review according to the Essentials of the Review to the Attached Tables of the Standard Form of the System Operators.
The Attached Tables of Standard Form and the Directions for Review for system operators shall be further promulgated by the central governing authority.
The contents in the financial reports of system operators shall properly express the financial situation, operation result, and cash flow, and shall not mislead the interested party into wrongful judgment or decision.
The system operator shall disclose the following information of itself and the affiliated enterprises:
1. Individual and total nationwide number of subscribers.
2. Total number of enterprises within the same administrative district.
3. Total number of nationwide system operators.
When a foreign shareholder directly or indirectly holds the shares of the system operator, the system operator shall disclose the individual and total percentage held by that foreign shareholder in the shares issued by the system operator.
Chapter 5 Other Provisions
These Regulations shall enter into force from January 1, 2002.
The amendments to these Regulations shall be enforced from the date of issuance.