ACM, Inc.
120 Erie Boulevard
Schenectady, NY 12305
Depreciation
By reviewing investment
and retirement activity, plant accounting practices, salvage,
cost of removal, capital expenditure plans, and by analyzing
plant accounts more closely, depreciation rates and expenses
can be justifiably increased, often significantly. Aside from
potential tangible financial benefits associated with increased
settlement cash flows, it is important for depreciation policies
and rates to reflect, as accurately as possible, the actual operations
and characteristics of your company. A depreciation review would
accomplish both.
Time Reporting Practices
Companies often get caught
in a routine of recording time and expenses the way it has always
been done. However, one very important fact to keep in mind is
that the recovery of every dollar of expense booked will vary
depending upon what account is affected. For example, Customer
Service Representatives often perform marketing, accounting,
or other functions, yet fail to appropriately capture this time
on their time sheets. As a result, the wages of these employees
are often under recovered from the Pools. All functional areas
across the company should be reviewed to assure that time and
expenses are going to optimal, and justifiable, accounts. Very
real improvements can be made by performing a time study customized
to your company's operations and by
reevaluating time reporting processes, where appropriate.
Regulated/Nonregulated Cost Allocations
All companies are required
to allocate costs between regulated and nonregulated operations.
Accurately identifying time and other direct expenses is the
first step in this process. However, the company must also properly
allocate joint and common costs for which there is no direct
assignment. Recent events indicate that regulators may be looking
for ways to lessen the pressure on local rates as traditional
"subsidies" are eliminated and "procompetitive"
policies are put into place. Cost allocations could be a potential
area of increased scrutiny. While a cost allocation review may
not generate the enhanced revenues streams that other reviews
produce, it should result in either (1) a confirmation that current
procedures are producing appropriate results, (2) changes to
bring current procedures into compliance, or (3) an understanding
of your level of exposure should existing practices to come under
regulatory scrutiny.
Separations
Separated cost studies
have long been the means by which cost recovery from the NECA
Access Pools has occurred. This is not to say that any single
separations model is correct. We continuously strive to adapt
our separations model to each company's specific set of circumstances
in order to produce the best possible results. In addition, it
is extremely important to analyze the model inputs provided by
the company for reasonableness and to determine whether better
results could otherwise be achieved. Aside from settlement reporting
purposes, a separations model should also be a valuable tool
for determining, in advance, the settlement implications associated
with various investment and expense decisions. For example, a
company's decision to deploy DSL technology will require some
network reconfiguration and additional equipment purchases, both
of which will impact the separated cost study and resultant settlements.
For more information on Cost Consulting
services contact Kevin Schwenzfeier at (518)374-5720 or by
