COMMERCIAL ACCOUNTS 1925. Accounts and Balance Sheets of the Post Office for the year ended 31 March 1926, including accounts of the Postal, Telegraph, and Telephone Services and certain subsidiary accounts; together with the report of the Comptroller and Auditor General thereon. Also certain returns relating to Capital Borrowings for Telegraph and Telephone purposes. (Presented pursuant to Acts 10 & 11 Geo. 5, c. 37, s. 2, and 11 & 12 Geo. 5, PUBLISHED BY HIS MAJESTY'S STATIONERY OFFICE. 15, Donegall Square West, Belfast, or through any Bookseller. 1927. Price 9d. Net. Other particulars of Post Office finance will be found in the Annual papers indicated below: Vote expenditure of the Post Office.. Appropriation Accounts Revenue Revenue collections of the Post Office Post Office London Tube Railway Income and Expenditure of the Post Transactions of the Post Office Savings Departments. In the Finance Accounts of the U.K. Post Office (London) Railway Savings Banks and Friendly Socie- Post Office Savings Banks Account. Transactions in Government Annuities Government Insurance and Anetc. (calendar year). nuities Account. REPORTS OF COMMITTEES, ETC. Report of the Departmental Committee on Telephone Rates 1920 (Command paper No. 804 of 1920) Report of the Select Committee on Telephone Charges (H.C. paper 247 of 1920) .. 9d. 2d. ld. 4s. :: 4s. Memorandum on the New Telephone Rates (Command paper No. 1143 of 1921).. Report of the Select Committee on the Telephone Service: 1921 (H,C. paper No. 191) .. 1922 (H.C. paper No. 54) ALL PRICES ARE NET. POSTAGE EXTRA. HIS MAJESTY'S STATIONERY OFFICE. LONDON: Adastral House, Kingsway, W.C.2. MANCHESTER: York Street. EDINBURGH: 120 George Street. Or through any Bookseller. I.-EXPLANATORY MEMORANDUM ON THE FOLLOWING ACCOUNTS. GENERAL. The object of the accounts published in this volume is to show the results of the operation of the Post Office services. Accordingly they bring together the revenue, capital expenditure and operating expenditure from the various accounts and returns in which they are accounted for to Parliament. The cash figures so obtained are adjusted to the income and expenditure basis, except where the variation is unimportant. Provision is made for the reserves for depreciation, pensions, etc., which are necessary to exhibit the commercial results of operation. Interest is charged on all loan capital or moneys treated as loan capital. From these figures separate accounts are prepared for the three main services, postal, telegraph, and telephone, with subsidiary accounts for particular services which lend themselves to separate accounting treatment. INTER-DEPARTMENTAL SERVICES. The Post Office performs a large amount of work for other Government Departments. On the postal side the work consists of carriage of mail matter, transaction of money order and postal order business and the rendering of various special services, of which the more important are the payment of War pensions and separation allowances and of old age pensions, services in connection with War Loans and National Savings Certificates and the sale of stamps for national insurance contributions. No cash payment is received for this work, but in the accompanying accounts credit is taken for it at public rates, where such exist, and where they do not, at cost. Telegraph and telephone services are, with a few minor exceptions, paid for in cash. Services are rendered to the Post Office by a number of Government Departments. The chief of these are the Office of Works which constructs and maintains buildings, the Stationery Office which supplies books, stationery and printing, and the Treasury which makes grants to local authorities in lieu of rates on premises. The cost of these services is borne on the Votes of the respective departments and no cash adjustment is made, but appropriate debits are made in the accompanying accounts. APPORTIONMENT. In the Appropriation Account of the Post Office Vote the expenditure is not divided between the three services-postal, telegraph and telephone. For the purpose of the Commercial Accounts it is necessary to apportion the expenditure incurred under those sub-heads of the vote which relate to more than one service. Engineering expenditure is allocated between the three services mainly as it is incurred. The apportionment of other "Common Service" expenditure is determined annually, from returns and information collected specially for the purpose, by a Common Service Apportionment Committee consisting of representatives of the Treasury and the Post Office. This Committee also determines, where necessary, the apportionment of expenditure by other Government Departments on behalf of the Post Office. The bulk of the Post Office Common Service expenditure, about seven-eighths in 1925, is for salaries and wages; and of this over 75 per cent. is in respect of staff employed wholly on one or other of the services. The salaries, wages, etc., of the remainder of the staff are allocated in the apportionment returns in proportion to the time devoted to the respective services. CAPITAL. The capital assets of the Post Office consist of Engineering plant and stores for the Telegraph, Telephone and Land and buildings. London Tube Railway. There are various other assets which might be regarded as Capital-such as Letter boxes, stocks of Uniform clothing, certain general stores, Furniture, Motor vehicles and Cycles. They are, however, in most cases comparatively shortlived, the total amount is relatively small, and the expenditure does not fluctuate greatly from year to year. Accordingly the cost of these items is charged against revenue as they are purchased. The great bulk of the capital expenditure of the Postal Service is in respect of land and buildings, which are dealt with in a separate account (see note on Land and Buildings, page 6). Partly for this reason, and also because Postal business is conducted almost entirely on the basis of cash prepayment, there is no statement of assets and liabilities for the Postal Service. An underground railway for the carriage of mails in London is in course of construction. The capital expenditure to date, provided partly by Loans under the Post Office (London) Railway Act, 1913, and partly by Advances made by the Exchequer out of Voted moneys, is included in the General Balance Sheet, and interest and depreciation thereon are charged in the Expenditure and Income Account of the Postal Services. INTEREST. The bulk of the capital expenditure of the Post Office has been incurred on the Telephone Service. This has been raised by (1) Loans under the Telegraph Acts, at rates of interest which are shown in statement X.c. (page 40). (2) Exchequer Bonds, on which interest is charged at 3 per cent. the rate at which the Bonds were issued and (3) Advances provided by the Exchequer out of Voted moneys at the rates shown below: (a) On expenditure prior to 1 April 1912-3 per cent. (b) On expenditure from 1 April 1912 to 31 March 1924 at the minimum rate ruling for loans from the Local Loans fund on 31 March 1924, viz., 4 per cent. (c) On expenditure from 1 April 1924, for all years. subsequent to the year of expenditure, at the minimum rate ruling for loans from the Local Loans fund on 31 March of the year of expenditure. In the actual year of expenditure the charge is calculated at the average Bank rate for the year, |