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RULES AND CIRCULATION AUDIT GUIDELINES OF THE NEW ZEALAND
AUDIT BUREAU OF CIRCULATIONS (INCORPORATED)


SECTION 1: RULES

1. Name
2. Objectives
3. Membership
4. Membership Classification
5. Membership Insignia
6. Committee
7. Executive Officer
8. Officers
9. Meetings
10. Voting
11. Termination of Membership
12. Reinstatement of Membership
13. Change of Rules
14. Finances, Fees and Levies
15. Circulation Audit Proceedures
16. Audit Reports
17. Circulation Summaries
18. Statements by Members
19. Website
20. Common Seal
21. Copyright in Material
22. Notices
23. Appointment of Liquidators


SECTION 2: CIRCULATION AUDIT GUIDELINES

1. Introduction
2. Scope Of The Audit
3. Circulation Audit Periods
4. Circulation Auditor Duties
5. Circulation Audit Report Figures
  a. Newspapers
(daily, non daily and weekly)

  b. Magazines
  c. Community Newspapers
  d. Bulk Distribution

5 B. Magazines

CATEGORIES OF CIRCULATION

B.1.  NET PAID SALES

1.1.  For the purposes of magazine circulation audit reports, 'Net Paid Sales' include copies of publications sold at 33% or more of their cover price, inclusive of GST, which:

a)  are sold through retailers, magazine or wholesale distributors and other recognized distribution channels that pay the wholesale price for single copy sales and claim credits for unsold copies;

b)  are sold directly to the public;

c)  if subscriptions are offered, are accepted at the full advertised subscription price, where the subscription price is 33% or more of the cover price for that subscription term;

d)  are sold as retail or subscriber sales of two or more issues within the same audit period, at a total price which represents 33% or more of the retail cover price for each issue;

e)  are single copies of a magazine purchased by the recipient, or a company or organisation on a person's behalf at 33% or more of their cover price.

f)  single copies sold at 33% or more of the cover price inclusive of GST and are requested by the recipient through a deliberate action, or by a company or organisation on a person's behalf, and are sent out addressed by name, directly to the individual at a verifiable recipient address.

g)  A subtotal of all subscription copies sold at 33% or more of cover price will also be shown (Subscription copies are defined as copies where more than 1 issue is paid for in advance in a single transaction) -SUBSCRIPTION COPIES SHOULD ALSO BE INCLUDED IN NET PAID SALES TOTAL.

1.2.  The following are not classified as Net Paid Sales:

a)  inter-company sales where copies are purchased within the publishing company or by a subsidiary for free onwards distribution.

B.2.  MULTIPLE PAID SALES

2.1.  For the purposes of the audit reports, Multiple Paid Sales includes copies of publications sold at 33% or more of their cover price, inclusive of GST, which:

a)  are sold as multiple copies to one person or location or organisation and are intended for onward distribution where the purchaser is not the intended recipient,and the purchaser can verify onwards distribution but they do not meet the requirements for addressed delivery.

B.3.  DIRECTED CIRCULATION REQUESTED

3.1.  For the purposes of the audit reports, 'Directed Circulation Requested' is defined as single copies, which are not paid for and are, therefore, available at less than 33% of the cover price or free and are:

a)  requested by the recipient through a deliberate action, or by a company or organisation on their behalf, and are sent out addressed by name or title, directly to the individual at a verifiable recipient address.

B.4.  DIRECTED CIRCULATION NOT REQUESTED

4.1.  For the purposes of the audit reports, 'Directed Circulation Not Requested' is defined as:

a)  single copies of a magazine not requested by the recipient available at less than 33% of the cover price or free where distribution to the recipient can be verified either directly or by a third party who receives multiple copies and completes the final distribution to the individual recipients.

B.5.  OVERSEAS COPIES

5.1.  For the purposes of the Circulation audit reports, copies of magazines that are distributed to recipients outside New Zealand, and which would otherwise qualify as 'Net Paid Sales', Directed Requested and Directed Non Requested can be recorded as overseas copies.

EXPLANATORY NOTES FOR MAGAZINE PUBLISHERS AND AUDITORS

B.6.  Publishers must provide to the auditors the following details to support an audit of issues published during any audit period (usually systems generated reports):

6.1.  Paid copies: Totals of paid sales, as listed in 1.1 a- f, plus subtotal for Subscriptions as per 1.1 g

6.2.  Multiple paid sales: Totals of multiple paid sales

6.3.  Totals of Directed Circulation Requested and Directed Circulation Not Requested.

6.4.  The number of issues of the magazine published in the audit period and the cover price for those issues.

B.7.  The following shall be included in the circulation for External audit period:

7.1.  All issues of a magazine bearing a cover date within the twelve-month period of the reporting/ audit period inclusive.

B.8.  The following magazines shall be excluded from the audit of Average Net New Zealand Circulation:

8.1.  Copies that are used for checking purposes in the publisher's office, office file or record copies, copies exchanged with other publishers for comparison purposes and other copies of a similar nature.

8.2.  Individual subscriptions in arrears; the number of unpaid subscription issues allowed before exclusion are:

Frequency of publication No. of issues before exclusion for a 12-month audit period No. of issues before exclusion for a 6-month audit period
Weekly 12 issues 6 issues
Fortnightly 8 issues 4 issues
Monthly 4 issues 2 issues
Bi-monthly & Quarterly 2 issues 1 issues
Bi-annual 0 issues 0 issues


8.3. 


Waste copies, spoils, overruns and replacement copies of all descriptions, incomplete copies.

8.4.  Copies where payment is more than six months in arrears.

8.5.  Issues may be excused due to exceptional circumstances resulting in a verifiable disruption to sales and supported by supplier documentation. These will include press, machinery or transport breakdowns resulting in a delay of retail and/or subscription delivery; periods when audit information is unavailable because of the purchase of a title by another publisher during the audit period; and market circumstances that result in the non-availability or withdrawal of part or all of the copies in the market, with a significant effect on retail and/or subscription distribution.

8.6.  Publishers may request an exclusion where there has been a disruption of scheduled distribution by statutory holidays (as defined by the Holidays Act) in the region where the publication is distributed.

NOTE:  In the case of 8.5 and 8.6, written application must be made by the publisher to the office of the ABC for approval of the exclusion. Proof of circumstances will be asked for.

8.7.  The calculations to be used to produce the circulation quantities for the audit period are:

(a)  Calculate Total Net Paid Sales by adding the net paid sales for all issues, Total Multiple Paid Sales by adding the multiple paid sales for all issues, Total Directed Requested by adding the directed requested for all issues and Total Directed Not requested by adding the directed not requested for all issues;

(b)  Calculate Total Net Circulation by adding the totals of Net Paid Sales, Multiple Paid Sales, Directed Requested and Directed Not Requested, for all issues within the audit period;

(c)  Calculate Average Net Paid Sales for the period by dividing Total Net Paid Sales by the number of magazine issues in the audit period; Average Multiple Paid Sales for the period by dividing Total Multiple paid sales by the number of magazine issues in the audit period, Average Directed Circulation Requested for the period by dividing Total Directed Requested by the number of magazine issues included in the audit period; and Average Directed Circulation Not Requested for the period by dividing Total Directed Not Requested by the number of magazine issues included in the audit period;

(d)  Calculate Average Net Circulation per issue for the period by dividing Total Net Circulation by the number of magazine issues included in the audit period;

(e)  Calculate Average Copies Sold Overseas for the period by dividing total Copies Sold Overseas by the number of magazine issues included in the audit period.

(f)  Calculate Average Subscription Copies Subtotal by adding Subscription Copies for all issues and dividing by the number of issues included in the audit period.

B.9.  In addition to procedures and duties detailed in these Rules and Circulation Audit Guidelines, auditors are obliged to:

9.1.  Obtain the publisher's internal reports for the audit period and verify paid sales against the publisher's supporting documentation.

9.2.  Obtain the publisher's internal print-run reports and print and distribution invoices for the audit and verify these against the publisher's supporting documentation.

9.3.  Compare the print-run reports to the distribution confirmation or mailing lists and investigate unusual variances due to wastage, internal usage, etc.

9.4.  Compare the current audit period's distribution to that of the prior period and investigate unusual variances.

9.5.  If the publication is distributed by an external organisation, confirm with these distributors the average number of magazines delivered per issue (excluding any returns) for all the issues in the audit period.

9.6.  Where Directed Circulation Not Requested is claimed, ensure that distribution to individuals or to the organisation who is responsible for the onward transmission of copies to individuals is confirmed.

9.7.  Compare the Average Net Paid Sales, Average Directed Circulation Requested, Average Directed Circulation Not requested, and Average Total Net Circulation with these averages for prior audit periods and investigate any unusual variances by discussion with the publisher.

9.8.  Form an opinion about the minimum level of circulation that can be audited and officially report a figure for this that can be supported by objective evidence.

9.9.  Verify and document in the Audit Report for any magazine:

(a)  Its cover price;

(b)  Date first published;

(c)  Average Net Paid Sales and average multiple paid sales;

(d)  Average Directed Circulation (Requested and Not Requested);

(e)  Average Total Net Circulation

(f)  Average Copies Sold Overseas;

(g)  The number of issues published (less exclusions).

9.10. 

The actual sales for any estimates of issues included in the previous audit period. Where actual sales vary significantly from the estimated sales, the Bureau should be informed so that the relevant figure can be amended in the summary of the relevant audit period.

B.10.  The audit must be completed and signed off by either

(i)  A Chartered Accountant who:

10.1.  is not an employee of the publisher;

10.2.  is the holder of a current certificate of public practice; and

10.3.  has been formally approved as auditor by the ABC following the publisher's submission of them as their auditor of choice
 
Or

(ii) 

an individual appointed by the ABC at its discretion as an approved auditor who:

10.4   is not an employee of the publisher;

10.5   the ABC believes has a comprehensive knowledge of ABC rules and auditing requirements

10.6   the ABC believes is a suitable person to conduct the audit.

NOTE:  The specific rules, guidelines and explanatory notes outlined above must be agreed to by the auditor and this agreement then becomes part of the audit approval process.

EXPLANATORY NOTES

B.11.  Main Segments and Categories of Circulation

  Circulation audit reports separate magazine circulation into three segments:

(a)  Average Net Paid Sales (with a subtotal for Subscription Copies); For Clarity Subscription copies are included within the net paid totals but are also reported as a separate subtotal.

(b)  Average Net Circulation (that is, the total of the Net Paid Sales, and the non-paid categories Directed Circulation Requested, and Directed Circulation Not Requested.

(c)  Overseas Copies are detailed separately and are not included in the Total Net New Zealand Circulation.

  For the Net Paid Sales category the qualifying price paid per issue for inclusion in the audit is 33% or more of the retail cover price. If a price of less than 33% is paid for copies, or copies are given away free, these are classified as non-paid copies (Directed Circulation)

B.12.  Cover Price
 
'Cover price' is defined as the retail price in NZ dollars, including GST, that is displayed on the masthead or cover of a magazine when it is published.

B.13.  Net Paid Sales - Inter-company Sales
 
Copies that are the subject of an inter-company sale can be treated as Directed Circulation Not Requested Copies, which are not included in the calculation of Net Paid Circulation.
 
Example: Inter-company Sales
 
Copies sold within the publishing company for free distribution are not to be included as Paid Sales (i.e. where the marketing department of a publisher self-purchases copies of a magazine using its marketing budget and then gives the copies to an advertiser for free distribution at a showroom or exhibition). These can be recorded as Directed Circulation Not Requested,
 
Copies sold by the publisher to another company in the same group for inclusion in a loyalty scheme or other incentive scheme and given to recipients as part of a service provided by the purchasing company may be included in the relevant classification.

B.14.  Directed Circulation Requested
 
Inclusion in the Directed Circulation Requested category requires a deliberate action towards receiving copies to be made by an individual or by an organisation on behalf of an individual - for example ticking a box, receipt of a signed form or email or similar.
 
This category also includes copies of a magazine provided as part of a primary product or service where the magazine is either free or paid at less than 33% of the cover price.

B.15.  Directed Circulation Not Requested
 
To qualify under this category, no more than one copy of a magazine can be provided to each individual either by mailing or being delivered directly to an individual attendee at a conference, course or event as part of materials or in an event bag issued to each individual participant. Where the distribution is completed by a third party (at a conference or similar) then verification from the third party that the magazines have been distributed to individuals is required.
 
Paid multiple sales where the magazines are initially sent to a third party rather than directly to individuals are included in this category due to the ease of manipulating sales as paid by including within provision of other services such as advertising.

B.16.  Direct Dispatch
 
Where copies of a magazine are sent to an individual they shall be dispatched directly by the publisher, or by their distribution provider to a mailing list provided by the publisher, except in cases where the purchase and dispatch is by a third party or organisation that provides confirmation to the satisfaction of the Auditor of onwards transmission to an individual.

B.17.  Distribution Channels
 
For the purposes of the audit reports, Distribution Channels for copies not sold at retail include delivery by mail, letterbox delivery and distribution at events, conventions or expositions, measured against the level of addressing criterion outlined in each category of classification.

B.18.  Copies Sold Overseas
 
Copies sold overseas include retail sales made at a location outside New Zealand, and subscriptions delivered to recipients at a delivery address outside of New Zealand.