On 18 December 2017, we published a statement setting out our decisions following Phase I of our review of the regulatory financial reporting requirements for Royal Mail. In that document, we set out modifications to the Universal Service Provider Accounting Condition (USPAC) and the Regulatory Accounting Guidelines (RAG). These modifications related mainly to the content, frequency and deadlines for the required regulatory financial reports and the related audit requirements.
Phase II of our review focused on the application of our costing rules in the RAG in light of changes to the cost allocation methods made by Royal Mail in 2013/14 and 2016/17. We published a consultation on 19 December 2018 (December 2018 Consultation) setting out our proposals to amend some of our costing rules to ensure that they remain fit for purpose.
This statement sets out our amendments to those costing rules (as well as some minor amendments to transfer pricing rules). The first three sections provide an overview of our duties and regulatory objectives, regulatory financial reporting requirements for Royal Mail, and how we use the information they provide. We expect these sections to be of interest to a wide range of stakeholders that have an interest in the postal sector.
In Section 4 we explain our proposals set out in the December 2018 Consultation, stakeholders’ responses and the amendments we have decided to make to the relevant costing rules. The modifications we have made to the RAG to reflect those amendments are set out in the statutory notification, which is published at Annex 1. This annex is likely to be of interest primarily to Royal Mail and other stakeholders with an interest in the technical details of our regulatory financial reporting requirements.