Detailed Guideline for Financial Reports of the Type I Telecommunications Enterprises (June 21, 2007)
The Guideline is enacted under Article 52 of the Accounting Standards and Regulations for the Type I Telecommunications Enterprises.
An operator shall set up the Operators' Procedure Manuals in accordance with Article 51 of the Accounting Standards and Regulations for the Type I Telecommunications Enterprises. The Procedure Manuals shall include the Companies Organizational Structure, Accounting System (including Financial Accounting System and Separations Accounting System), Chart of Accounts, Accounting Policies, Accounting Method of Related Parties and Internal Transactions, Cost Allocation, and Research, Investigation and Models of Account Separations.
The internal control system of a Dominant Carrier in telecommunications market or a Publicly Traded Operator shall be in accordance with Guideline for Establishment of Internal Control Systems by Public Companies.
The above-mentioned Internal Control System shall be reviewed annually. The review shall consist of self-evaluate reports prepared by the various departments of the company and audit reports made up by the Internal Control Unit. The above shall be submitted to the National Communications Communications (hereinafter referred to as the NCC)for review as the "Declaration of Internal Control" along with the company's financial reports.
The rules of Internal Control of a Non-Dominant Carrier in Telecommunications Market or an operator not trading its stocks in public, shall be made in accordance with Article 40 of The Consideration of Internal Control, Generally Accepted Auditing Standards (GAAS)No.32, in order to ensure that the internal control objectives are achieved.
The financial reports refer to the financial statements, a company table and related footnote disclosure that may be helpful for user's decision making.
Financial statement shall include the Balance Sheet, Income Statement, Statement of Cash Flow, and Statement of Changes in Shareholders' Equity and annotation and attachments thereof. The Separations Accounting Statements shall including Income Statement of telecommunication business and other segments, Investment Report by business segment, Income Statement by business segment, Internal Resources Usage Valuation Report, Unit Cost Calculation Chart of Network Component, and reports of Communication Equipment Alteration and its annotation, and the attached tables.
An Operator shall be responsible for preparing for the General Financial Reports and appointing a certified public accountant to make an audit.
The General Financial Reports of Dominant Carrier Operator or an Operator with contributed capital of more than NTD 2 billion shall be prepared in accordance with Article 13 of this Guideline, "The Financial Statement of Separations Accounting", and shall be audited and certified by a certified public accountant.
An Operator with contributed capital of less than NTD 2 billion shall arrange the Income Statement of Telecommunications Business Segment and other segments, the Investment Report by Business segment, the Income Statement by Business segment, and the Internal Resources Usage Valuation Chart of the Financial Statement of Separations Accounting, the above shall not be required to be audited and certified by a certified public accountant except for the Income Statement by Business segment.
An Operator with contributed capital of less than NTD 2 billion but provide two or more Type I Telecommunications Business shall arrange the Income Statement of Telecommunications Business Segment and other segments, the Investment Report by Business segment, the Income Statement by Business segment, and the Internal Resources Usage Valuation Chart of the Financial Statement of Separations Accounting, the above shall be audited and certified by a certified public accountant.
Except the newly established business, the general financial statement, the accounting separations financial reports and the annotations and attachments shall contain in the same place of the information of current period and the proceeding period. The statements mentioned in this Article shall be signed or stamped page-by-page and be approved by the responsible person, manager and accountant of the Operator.
The financial reports shall properly reflect the financial condition, operation result and cash flow of the company, as a whole, its segments and its various telecommunications business.
To properly reflect the financial conditions, operation result and cash flow, the financial reports shall include the following items:
(1)The history and business scope of the company.
(2)Statements of major accounting policies.
(3)When the accounting procedures of the company is changed, the reason for making such change and its impact on the financial statements shall be disclose.
(4)The evaluation basis of financial report shall be separately stated.
(5)The financial statement elements shall be under the restriction of ordinances, agreements or other conditions, the conditions, effective period and other relevant information regarding such restrictions shall be included in the annotation.
(6)Major commitment or contingent liability.
(7)Change in capital structure.
(8)Additional borrowing through long-term or short-term loans.
(9)The acquisition, expansion, construction, lease, salvaging, idling, sale, transfer or long-term lease of the major assets.
(10)The significant investment in other business.
(11)Major significant transaction with related parties and the valuation basis of such transactions.
(12)The execution, completion, rescission or termination of important contracts.
(13)Information relating to employee pension.
(14)Significant changes in organizations structure and management system.
(15)The impact resulting from the change of government ordinance.
The following events occurs between the date of the balance sheet and the financial report filing date, shall be disclosed in the financial report:
(1)Change in capital structure.
(2)The additional acquisition, expansion, construction, lease, salvaging, idling, sale, transfer or long-term lease of the major assets.
(3)The significant major changes in manufacturing capacity.
(4)Significant changes in production and marketing policy.
(5)The executing, completion, rescission or termination of important contracts.
(6)Significant changes in organizational structure and management system.
(7)Impact resulting from the change of government ordinance.
(8)Other significant events or elements that may influence the future financial conditions, operation result and cash flow of company entity.
The accounting classifications and account contents in the general financial statements shall be reported in accordance with the Accounting Standards for Financial Reports of Stock Publisher published by the Ministry of Finance.
The accounting classification and account contents in the telecommunications accounting separation financial reports shall be reported in accordance with the Guideline on Accounts Prescribed of Type I telecommunications Operators issued by the NCC.
The amounts reported in accounting subsidiary ledgers of Income Statement of telecommunication segment and other segments shall be consistent with the amount reported in the Income Statement of the company's General financial statement.
The amounts reported in accounting subsidiary ledgers of Income Statement by business segment shall be consistent with the Income Statement of telecommunication segments and other segments.
The amounts reported in accounting subsidiary ledgers of Investment Report by business segment shall be consistent with the Balance Sheet of General Financial Statement.
Statement of Cash Flow shall reflect the Operator's cash collection and disbursement during a specified period of time.
Statement of Cash Flow shall be prepared in accordance with the No. 17 of the Statements of Financial Accounting Standards (SFAS).
The terms to be included in the financial statement are as follows:
(3)Sheet of Cash Flow
(4)Statement of Changes in Shareholders' Equity
An Operator shall follow the standard classification and coding scheme prescribed in the Accounting Standards for Financial Reports of Stock Publisher issued by the Ministry of Finance for maintaining the above referenced financial statements.
The terms of Financial Statement of Separations Accounting and the major Accompanied report are as follows:
(1)The Income Statement of Telecommunications Services Segment and other segments. (as Form 1 )
(2)Investment Report by Business Segment. (as Form 2 )
(3)Income Statement by Business Segment. (as Form 3 )
(4)Internal Resources Usage Valuation Chart. (as Form 4 )
(5)Unit Cost Calculation Table for Network Components. (as Form 5 )
(6)Changes in Communication Equipment . (as Form 6 )
The financial report shall be certified by a certified public accountant and be submitted to the NCC within six months after the end of the accounting year.
The Guideline shall come into effect upon the date of promulgation.