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Annual Review 2002/2003
 
 
Reports on compliance and regulatory matters « back
3 Governors’ report on BBC World Service Trading Protocols
BBC World Service is responsible for commissioning and scheduling its own programmes and for making programmes for its language services, but purchases English language programme-making and technical and support services from other divisions of the BBC (the Supplier Divisions). BBC World Service also receives services from and supplies services to the BBC’s commercial subsidiaries (the Subsidiaries).
It was agreed by a joint Foreign and Commonwealth Office (FCO)/BBC World Service Working Group that the BBC would draw up guidelines to govern the trading relationship between BBC World Service and other parts of the BBC, in order to ensure that BBC World Service maintains its distinctive voice and to preserve the clear separation between Grant-in-Aid and licence fee income. These Trading Protocols were approved by the Governors’ Fair Trading Compliance Committee (FTCC) in 1997. Each of the Supplier Divisions then drew up detailed agreements with BBC World Service, specifying:
+ the services to be provided
+ criteria to ensure the quality of the services
+ the cost of the services
The FTCC is responsible for monitoring and reviewing compliance with the Trading Protocols. The FTCC receives regular reports from management on the effectiveness of the systems and procedures in place to ensure compliance with the Trading Protocols.
KPMG LLP (the external auditors) have reviewed a summary of the value of transactions and the related cash flows which have taken place during the year between BBC World Service and the Supplier Divisions and Subsidiaries. KPMG LLP have reported to the Governors that, in their opinion, the information contained in the summary of transactions for the year ended 31 March 2003 has been accurately extracted from the books and records of BBC World Service and the Supplier Divisions and Subsidiaries, and has been properly prepared on the bases of cost allocation and apportionment methods set out in the agreements between BBC World Service and the Supplier Divisions and Subsidiaries and, on this basis, there has been no material cross-subsidy between Grant-in-Aid and licence fee funds or between Grant-in-Aid and the BBC’s commercial subsidiaries.
Governors’ statement on BBC World Service Trading Protocols
Following regular reports to the FTCC by the Head of Fair Trading, and internal and external auditors, the Governors are satisfied that:
+ the Trading Protocols reflect the requirements of the FCO/BBC World Service Working Group
+ agreements are in place which are consistent with the Trading Protocols
+ there has been no material cross-subsidy between Grant-in-Aid and licence fee funds or between Grant-in-Aid and the BBC’s commercial subsidiaries
 
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