Committee Reports::Report - Appropriation Accounts 1965 - 1966::14 July, 1967::Appendix


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APPENDIX XXVIII.

DEPARTMENT OF POSTS AND TELEGRAPHS

Commercial Accounts—Year ended 31st March, 1966

Presented to the Oireachtas pursuant to the Telegraph (Money) Act, 1920, the Exchequer and Audit Departments Act, 1921, and the Telephone Capital Acts, 1924 to 1963.

INTRODUCTORY NOTE

The Commercial Accounts present the position of the Department of Posts and Telegraphs as a trading concern. They consist of Income and Expenditure Accounts and a Balance Sheet, compiled in accordance with commercial practice. They are used to determine financial policy, including the fixing of charges to the public.

The Oireachtas controls, both in total and in some detail, the money spent by Government Departments. The Department obtains authority from the Oireachtas for its expenditure, other than on capital works financed by borrowings from the Exchequer under the Telephone Capital Acts, 1924-1963, by way of an annual Estimate, and accounts for it in an Appropriation Account. Cash revenue is paid into the Exchequer and is accounted for in the Finance Accounts.

ACCOUNTS—SUMMARY OF RESULTS

							1965/66	1964/65
							£000	£000
General Account:
Income	...	...	...	...	...	...	19,891	18,265
Expenditure		...	...	...	...	...	19,550	18,332
Surplus	...	...	...	...	...	...	341	—
Deficit	...	...	...	...	...	...	—	67
Postal Account:
Income	...	...	...	...	...	...	7,981	7,702
Expenditure		...	...	...	...	...	7,942	7,847
Surplus	...	...	...	...	...	...	39	—
Deficit	...	...	...	...	...	...	—	145
Telegraph Account:
Income	...	...	...	...	...	...	732	668
Expenditure		...	...	...	...	...	924	947
Deficit	...	...	...	...	...	...	192	279
Telephone Account:
Income	...	...	...	...	...	...	9,367	8,281
Expenditure		...	...	...	...	...	8,873	7,924
Surplus	...	...	...	...	...	...	494	357
Agency Account:
Income	...	...	...	...	...	...	1,811	1,614
Expenditure		...	...	...	...	...	1,811	1,614

ACCOUNTS—GENERAL ACCOUNT

Income and Expenditure for Year ended 31st March, 1966.

Income							1965/66	1964/65
							£	£
Postal service		...	...	...	...	...	7,980,959	7,702,136
Telegraph service		...	...	...	...	...	732,164	667,655
Telephone service		...	...	...	...	...	9,367,441	8,281,235
Agency service		...	...	...	...	...	1,810,211	1,614,123
Deficit	...	...	...	...	...	...	—	67,279
Total					...	...	19,890,775	18,332,428
Expenditure							1965/66	1964/65
							£	£
Salaries, Wages, etc.			...	...	...	...	10,970,891	10,818,064
Pension Liability		...	...	...	...	...	775,727	762,196
Accommodation		...	...	...	...	...	632,148	576,478
Materials and Transport			...	...	...	...	1,162,158	977,641
Conveyance of Mails			...	...	...	...	1,190,450	1,113,383
Payments to foreign administrations					...	...	390,503	352,385
Depreciation on Plant and Buildings					...	...	1,962,764	1,689,397
Interest	...	...	...	...	...	...	2,157,456	1,778,585
Miscellaneous		...	...	...	...	...	307,749	264,299
Surplus	...	...	...	...	...	...	340,929	—
Total					...	...	19,890,775	18,332,428

ACCOUNTS—POSTAL SERVICE

Income and Expenditure for Year ended 31st March, 1966.

Income							1965/66	1964/65
							£	£
Mail services		...	...	...	...	...	7,664,635	7,331,306
Remittance Services:
Money Order poundage, etc.				...	...	...	60,677	83,829
Postal Order poundage, etc.				...	...	...	152,648	185,413
Miscellaneous		...	...	...	...	...	102,999	101,588
Deficit	...	...	...	...	...	...	—	144,798
Total					...	...	7,980,959	7,846,934
Expenditure							1965/66	1964/65
							£	£
Salaries, Wages, etc.			...	...	...	...	5,693,942	5,676,891
Pension Liability		...	...	...	...	...	332,631	332,459
Accommodation		...	...	...	...	...	94,697	93,877
Materials and Transport			...	...	...	...	409,285	421,370
Conveyance of Mails			...	...	...	...	1,190,450	1,113,383
Payments to foreign administrations					...	...	70,021	59,312
Depreciation on Buildings			...	...	...	...	15,908	14,089
Interest	...	...	...	...	...	...	55,335	48,004
Miscellaneous		...	...	...	...	...	80,031	87,549
Surplus	...	...	...	...	...	...	38,659	—
Total					...	...	7,980,959	7,846,934

ACCOUNTS—TELEGRAPH SERVICE

Income and Expenditure for Year ended 31st March, 1966.

Income								1965/66	1964/65
								£	£
Telegrams		...	...	...	...	...	...	462,680	442,071
Telex	...	...	...	...	...	...	...	164,297	119,392
Private Wire Rentals				...	...	...	...	72,249	71,000
Miscellaneous			...	...	...	...	...	32,938	35,192
Deficit		...	...	...	...	...	...	192,145	279,264
Total						...	...	924,309	946,919
Expenditure								1965/66	1964/65
								£	£
Salaries, Wages, etc.				...	...	...	...	539,781	584,404
Pension Liability			...	...	...	...	...	35,971	39,177
Accommodation			...	...	...	...	...	43,907	42,330
Materials and Transport				...	...	...	...	52,335	46,627
Payments to foreign administrations						...	...	139,833	132,999
Depreciation on Plant and Buildings						...	...	32,888	32,327
Interest		...	...	...	...	...	...	60,516	51,636
Miscellaneous			...	...	...	...	...	19,078	17,419
Total						...	...	924,309	946,919

ACCOUNTS—TELEPHONE SERVICE

Income and Expenditure for Year ended 31st March, 1966.

Income						1965/66	1964/65
						£	£
Exchange Line Rentals, etc.			...	...	...	2,376,690	2,146,488
Private Wire Rentals, etc.		...	...	...	...	183,919	172,300
Trunk Call fees	...	...	...	...	...	3,830,765	3,548,122
Local Call fees	...	...	...	...	...	2,292,111	1,847,886
Call Office receipts	...	...	...	...	...	482,352	412,336
Miscellaneous	...	...	...	...	...	201,604	154,103
Total				...	...	9,367,441	8,281,235

Expenditure							1965/66	1964/65
							£	£
Salaries, Wages, etc.			...	...	...	...	3,463,049	3,297,806
Pension Liability		...	...	...	...	...	306,178	291,568
Accommodation		...	...	...	...	...	438,162	384,207
Materials and Transport			...	...	...	...	417,043	389,585
Payments to foreign administrations					...	...	180,649	160,074
Depreciation on Plant and Buildings:
					£	£
At prime cost				...	1,609,980	(1,379,854)
Supplementary provision					295,000	(255,000)
							1,904,980	1,634,854
Interest	...	...	...	...	...	...	2,010,342	1,651,285
Miscellaneous		...	...	...	...	...	152,623	115,073
Surplus	...	...	...	...	...	...	494,415	356,783
Total					...	...	9,367,441	8,281,235

ACCOUNTS—AGENCY SERVICES

Income and Expenditure for year ended 31st March, 1966.

Income							1965/66	1964/65
							£	£
Social Welfare Services			...	...	...	...	590,949	594,299
Savings Bank and Prize Bonds				...	...	...	330,772	337,181
Savings Certificates and Stamps				...	...	...	99,761	99,902
Collection of broadcasting licence fees					...	...	193,059	175,628
Civil Aviation and Coast Radio				...	...	...	363,761	201,722
Provision of Stores		...	...	...	...	...	133,832	135,034
Miscellaneous		...	...	...	...	...	98,077	70,357
Total					...	...	1,810,211	1,614,123
Expenditure							1965/66	1964/65
							£	£
Salaries, Wages, etc.			...	...	...	...	1,274,119	1,258,963
Pension Liability		...	...	...	...	...	100,947	98,992
Accommodation		...	...	...	...	...	55,382	56,064
Materials and Transport			...	...	...	...	283,495	120,059
Depreciation on Buildings			...	...	...	...	8,988	8,127
Interest	...	...	...	...	...	...	31,263	27,660
Miscellaneous		...	...	...	...	...	56,017	44,258
Total					...	...	1,810,211	1,614,123

ACCOUNTS—BALANCE SHEET

Balance Sheet at 31st March, 1966.

Assets				31st March, 1966		31st March, 1965
				£	£	£	£
Fixed:
Plant and Buildings (see note 8 (a)		...	...		38,665,959		33,486,823
Current:
Engineering stores in stock	...	...	...	3,569,230		2,555,594
Debtors for revenue			...	2,342,862		2,291,519
Cash: On capital account				45,048		—
On revenue account				2,265,411		1,230,148
Subscribers’ deposits			...	15,000		15,000
					8,237,551		6,092,261
					46,903,510		39,579,084

Liabilities				31st March, 1966		31st March, 1965
Capital:				£	£	£	£
Exchequer for capital advances (see note 8 (b)	...	...	...		42,086,320		35,908,720
Current:
Sundry creditors:
For engineering stores				193,917		133,697
For revenue		...	...	483,751		369,397
Exchequer for revenue not yet paid over		...	...	4,139,522		3,167,270
					4,817,190		3,670,364
					46,903,510		39,579,084

L. Ó BROIN,

24 February, 1967.

Accounting Officer.

NOTES ON THE ACCOUNTS, 1965/66.

1. Accrual of Income and Expenditure.

The accounting system of the Department is on a receipts and payments basis, but in these accounts the expenditure incurred and income due for the year are shown. Exceptionally, in the case of salaries and certain minor expenses and services, where the variation would be small, the actual payments and receipts are normally taken as the expenditure and income for the year.

2. Appointment of Common Service Expenditure

As far as possible expenditure on the operation of the Department’s services is directly apportioned to the postal, telegraph or telephone service as incurred. Most non-engineering expenditure cannot be so apportioned and, where necessary an estimated apportionment is made on a statistical basis.

3. Pension Liability

This is the estimated contribution that would need to be made to a fund to provide the superannuation and related benefits accruing to established staff now serving.

4. Accommodation

This includes maintenance and repair of buildings, rent, rates, minor building works and alterations, furniture, water, electricity and fuel, but excludes depreciation and interest on capital costs. The cost is apportioned to the different services on the basis of user.

5. Depreciation

(a) Plant—The straight line method of depreciation is used. The prime cost of each type of plant is depreciated in accordance with the estimated life. In view of the rising costs, the adequacy of the present basis is under examination, and, pending the result, a supplementary provision of £295,000 has been made in the case of telephone plant. Engineering stores are depreciated when brought into use.

(b) Buildings—Depreciation and interest are covered by annuities set up when costs are incurred.

6. Interest

The rates of interest are prescribed by the Minister for Finance. The interest paid in 1965/66 represented 5.6 per cent on outstanding capital. The average interest payable on new capital is 6.4 per cent.

7. The Agency Services Account

This Account shows the value of services which for reasons of convenience or economy, the Department performs on behalf of other Government Departments (e.g., the payment of Social Welfare benefits and the issue of various licences at post offices). Up to the 1st April, 1964, these services were generally performed without charge, except where the liability fell on some special fund like the Savings Bank Fund or the Social Insurance Fund. As from the 1st April, 1964, all agency services performed by the Department have been placed on a cash basis, except for the collection of broadcasting licence fees. (These fees are paid in full into the Exchequer and a grant of an equivalent amount less the costs of collection, etc., is made from the Exchequer to Radio Telefís Éireann.) Payments by the Department for the services it receives from other departments are included in the expenditure shown in the Postal, Telegraph and Telephone Service accounts.

8. The Balance Sheet

(a) Assets—Fixed assets are shown at prime cost. Details are given in Statement One.

(b) Liabilities—The figure of £42,086,320 for capital liabilities represents the net total (allowance having been made for depreciation provision) of advances under the Telephone Capital Acts, 1924-1963 and other amounts furnished by the Exchequer for the provision of fixed assets, i.e. plant and buildings, and stocks of engineering stores.

STATEMENTS—FIXED ASSETS

Statement One: Fixed Assets for the year ended 31st March, 1966.

					Telegraph Plant	Telephone Plant	Accommodation Plant‡	Land	Buildings	Total
					£	£	£	£	£	£
At 31 March, 1965 Value at
Prime Cost			...	...	613,790	38,144,526	405,527	251,251	3,847,637	43,262,731
Less: Depreciation			...	...	126,450	8,896,067	210,339	—	543,052	9,775,908
Depreciated Value				...	487,340	29,248,459	195,188	251,251	3,304,585	33,486,823
Changes in 1965/66 VALUE Prime cost at 31 March,
1965 (as above)				...	613,790	38,144,526	405,527	251,251	3,847,637	43,262,731
Additions during 1965/66					119,460	5,541,991	98,456	36,723	803,181	6,599,811
					733,250	43,686,517	503,983	287,974	4,650,818	49,862,542
Less: Assets written out
during 1965/66			...	...	—	—	—	—	—	—
Gross value at 31 March, 1966					733,250	*43,686,517	503,983	287,974	4,650,818	49,862,542
DEPRECIATION
Depreciation at 31 March,
1965 (as above)				...	126,450	8,896,067	210,339	—	543,052	9,775,908
Add: Provision for 1965/66					27,000	1,881,479	31,001	—	23,284	1,962,764
					153,450	10,777,546	241,340	—	566,336	11,738,672
Less: Cost of renewals
1965/66	...	...	...	...	51,368	481,348	9,373	—	—	542,089
Depreciation at 31 March,
1966		...	...	...	102,082	10,296,198	231,967	—	566,336	11,196,583
NET VALUE at 31 March, 1966 (as shown in Balance
Sheet)		...	...	...	631,168	33,390,319	272,016	287,974	4,084,482	38,665,959

STATEMENTS—TELEPHONE CAPITAL REPAYMENTS: RECENT BALANCES

Statement Two: Telephone Capital Repayments

Annuities paid to the Department of Finance in respect of advances under the Telephone Capital Acts, 1924-1963		Capital Repayment	Interest	Total
		£	£	£
Year ended 31st March, 1966	...	1,011,778	1,673,993	2,685,771

Statement Three: Balances over last Ten Years

Surplus or deficit (after charging Interest on Capital)

Year		Postal	Telegraph	Telephone	Total
		£	£	£	£
1956/57	...	-28,602	-195,019	+254,512	+30,891
1957/58	...	+104,999	-177,556	+366,377	+293,820
1958/59	...	+4,672	-140,144	+413,048	+277,576
1959/60	...	+129,771	-136,867	+396,179	+389,083
1960/61	...	+91,291	-149,524	+426,822	+368,589
1961/62	...	-75,489	-195,113	+281,634	+11,032
1962/63	...	-99,031	-201,095	+346,734	+46,608
1963/64	...	-170,447	-191,228	+197,111	-164,564
1964/65	...	-144,798	-279,264	+356,783	-67,279
1965/66	...	+38,659	-192,145	+494,415	+340,929

CERTIFICATE AND REPORT OF THE COMPTROLLER AND AUDITOR GENERAL

Certificate

I have examined the foregoing Accounts and Balance Sheet in accordance with the provisions of the Exchequer and Audit Departments Act, 1921. I have obtained all the information and explanations that I have required and I certify, as the result of my audit, that in my opinion these Accounts and Balance Sheet together with the notes thereon and Statement 1 (Fixed Assets) are properly drawn up so as to exhibit a true and fair view of the transactions and state of affairs of the services to which they relate, subject to the observations in my report.

E. F. SUTTLE,

Ard Reachtaire Cuntas agus Ciste.

(Comptroller and Auditor General).

Report

Results of the Accounts

As shown in the General Account of Income and Expenditure there was a surplus of £340,929 on all services as compared with a deficit of £67,279 in the previous year. The separate accounts show a deficit of £192,145 on the Telegraph service and surpluses of £38,659 and £494,415 on the Postal and Telephone services respectively.

Pension Liability and Depreciation of Telephone Plant

I am informed that the investigations referred to in my report on the accounts for 1959-60, into the adequacy of the provisions for pension liability and for telephone plant depreciation are still in progress. The supplementary provision of £295,000 for telephone plant depreciation shown in the accounts for the year under review has been made in view of the probable effects of rising costs on replacement.

E. F. SUTTLE,

Ard Reachtaire Cuntas agus Ciste

(Comptroller and Auditor General).

27 Feabhra, 1967.

*An analysis of this sum is as follows:

						£
Overhead wires, poles, etc.			...	...	...	12,620,773
Underground cables and ducts			...	...	...	14,617,438
Exchange equipment		...	...	...	...	15,735,531
Submarine cables	...	...	...	...	...	148,979
Television Link	...	...	...	...	...	453,142
Telecommunications Satellites			...	...	...	50,807
Other equipment		...	...	...	...	59,847
						43,686,517

‡ Accommodation Plant. The amounts shown under this heading are mainly in respect of heating and lighting installations and are common to all services.