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ANNEX 5
PRINCIPLES AND GUIDELINES FOR CALCULATING REGIONAL
VALUE CONTENT ON THE ATIGA
A.
Principles to Determine Cost for Regional Value Content
i.
Materiality – all cost material to the evaluation,
assessment and determination of origin;
ii.
Consistency – costing allocation method should be
consistent unless justified by commercial reality;
iii.
Reliability – costing information must be reliable and
supported by appropriate information;
iv.
Relevance – costs must be allocated based on objective
and quantifiable data;
v.
Accuracy – costing methodology
should provide an
accurate representation of the cost element in question;
vi.
Application of GAAP of the exporting country –
costing information must be prepared in accordance with
the generally accepted accounting principles and this
includes the avoidance of double-counting of cost items;
vii.
Currency –
updated costing information from existing
accounting and costing records of companies should be
used to calculate origin.
B.
Guidelines for Costing Methodologies
i.
Actual Costs – basis for actual costs should be defined
by the company. Actual costs should include all direct
and indirect costs incurred in producing the product;
ii.
Projected and Budgeted Costs – projected costs may
be used if it is justified. Companies should provide
variance analysis and proof during the period origin is
claimed to indicate accuracy of projections;
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iii.
Standards Costs – the basis for standards costs should
be indicated. Companies should provide evidence that
the costs are used for accounting purposes;
iv.
Average/Moving Average Costs – average costs may
be used if justified; the basis for calculating average
costs, including time period, etc. should be highlighted.
Companies should provide variance analysis and proof
during the period origin is claimed to indicate accuracy of
average costs;
v. Fixed
Costs
– fixed costs should be apportioned
according to sound cost accounting principles. They
should be a representative reflection of unit costs for the
company in the particular period in question. The method
for apportionment should be indicated.