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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Federal Communications Commission Washington, D.C. 20554 In reply refer to: RAO Letter 19 Released: December 23, 1991 RESPONSIBLE ACCOUNTING OFFICER Re: CC Docket No. 86-111 Cost Allocation Manual--Format and Filing Procedures In the Joint Cost Order, the Commission required certain telephone companies to file manuals containing the methods they use to separate the costs of providing regulated telephone service from the costs of nonregulated activities. These manuals must include: (a) a description of each of the company's nonregulated activities; (b) a list of all incidental activities and the justification for treating each as incidental; (c) a chart showing all of its corporate affiliates; (d) a statement which identifies affiliates that engage in or will engage in transactions with the carrier entity and which describes the nature, terms, and frequency of such transactions; and (e) for each USOA account and subaccount, detailed specifications of the cost categories to which amounts in the account or subaccount will be assigned and the basis on which each cost category will be apportioned. In accordance with the Joint Cost Order, the local exchange carriers and the American Telephone and Telegraph Company filed cost allocation manuals (CAMs) containing the required information. However, the Order provided no format specifications, and therefore, the presentation of information in the CAMs differed widely. After a thorough review of the CAMs and of the numerous revisions made since their initial filing, we have determined that a uniform format and filing procedure would greatly improve the CAM review process. We also have determined that adding a matrix in the nonregulated activities section would enhance our regulatory review. In addition, we have found that a more detailed transmittal letter explaining the revisions would be helpful. The purpose of this letter is to establish the uniform format of the CAM and the standard procedure for filing revisions. These are included in the Appendix to this letter. This letter is issued pursuant to authority delegated under Section 0.291 of the Commission's Rules, 47 C.F.R.  0.291. Applications for review under Section 1.115 of the Commission's Rules, 47 C.F.R.  1.115 must be filed within 30 days of the date of this letter. See 47 C.F.R.  1.4(b)(2). If you have any questions, please contact the Chief of the Accounting Systems Branch at (202) 418-0810. Sincerely, Kenneth P. Moran Chief, Accounting and Audits Division Common Carrier Bureau APPENDIX A. Format of Cost Allocation Manual 1. Each Cost Allocation Manual (CAM) must contain seven sections as set forth below. Each section must be separated by a divider. Each section must contain a glossary of terms in the instances where the carrier uses technical terms or acronyms not readily understood. Any additional information a carrier deems necessary to the understanding of its manual must be included in the appropriate section of the CAM. Table of Contents I. Introduction II. Nonregulated Activities III. Incidental Activities IV. Chart of Affiliates V. Transactions With Affiliates VI. Cost Apportionment Tables VII. Time Reporting Procedures 2. Each page of the CAM must contain the company name, a page number indicating the section number in Roman numerals and the Arabic page number (e.g., V-3) and the date the page was filed with the Commission. This information must be placed at the bottom of the page. 3. Section II, Nonregulated Activities, must contain a matrix which shows each nonregulated product and the accounts associated with that nonregulated product. 4. Section V, Transactions With Affiliates, must be arranged by affiliate and not by type of transaction provided. The transactions must be grouped into two categories: a. Transactions from the telephone company to its affiliates. b. Transactions from the affiliates to the telephone company. This section must also contain a matrix which shows each type of affiliate transaction and the affiliates involved. 5. Section VI, Cost Apportionment Tables, must have a comments column on each page for explanatory information on apportionment procedures. This must be the last column on the page. 6. Section VII, Time Reporting Procedures, must have a matrix which shows the time reporting method used by each employee group. B. Procedures for Filing Revisions 1. Each carrier must submit five copies of each CAM revision to the Commission on punched paper so that the pages fit into the binders provided by the company. Each copy must indicate all revisions with a vertical line in the right-hand margin. In addition, all revised language must be in bold-face type on each of the five copies. A copy of the transmittal letter must accompany each copy of the revision. Four copies must be filed with the Office of the Secretary. The fifth copy must be delivered to the Chief, Accounting Systems Branch, Accounting and Audits Division, 2000 L Street, N.W., Room 812, Washington, D.C. 20554. An additional copy must be delivered to the Downtown Copy Center, 1114 21st Street, N.W., Washington, D.C. 20036. 2. The transmittal letter that accompanies each revision must have an attachment that lists each page and the last filing date for each page. This attachment should be similar to the check sheet in the tariff filings. The transmittal letter must also have an attachment that provides the following information for each revision: the page number of the revision; the USOA account number, if applicable; the CAM language to be revised; the proposed CAM language; and, a detailed explanation of the reason for the change. This information must be presented in the following format: PAGE/ CHANGE CHANGE REASON FOR USOA FROM TO CHANGE ACCOUNT 3. Pages that are deleted should be left in the CAM and labeled "This Page Intentionally Left Blank." Deletion of several continuous pages may be indicated on one page; for example, "Pages 10-20 have been deleted." Any deletions should appear as blank space so that the deletion is apparent. 4. Pages that are added during the year should be renumbered as A, B, C, etc. For example, if a carrier added a new page after page 6 in Section II, this new page will be identified as Page II-6A. 5. By December 31, of each year each carrier must submit a revised CAM that has been reformatted to eliminate blank spaces and repaginated to include pages added during the calendar year. The fourth quarter revisions should be indicated as explained in B.1., above. The copy delivered to the Chief, Accounting Systems Branch and one additional copy must be submitted in three-ring binders with each section separated by dividers. 6. With the exception of the fourth quarter when all companies must file a revised CAM, if a company has no quarterly revisions, it must file five copies of a letter with the Commission indicating that there are no changes. Four copies must be filed with the Office of the Secretary. The fifth copy must be delivered to the Chief, Accounting Systems Branch, Accounting and Audits Division, 2000 L Street, N.W., Room 812, Washington, D.C. 20554. An additional copy must be delivered to the Downtown Copy Center, 1114 21st Street, N.W., Washington, D.C. 20036.