35.  OPEN BOOK ACCOUNTING

35.1.  Without prejudice to Schedule 14 (Change Protocol) the Service Provider shall, at the request of the Authority, provide to the Authority a Certificate of Costs within 15 Business Days of such request provided that the Authority may not request a Certificate for Costs more than once in any Contract Year.  The Certificate of Costs shall be prepared in accordance with generally accepted accounting principles and Good Industry Practice.  The Service Provider shall arrange for the Certificate of Costs to be audited as soon as practicable after submission to the Authority and a copy of the audited version of the Certificate of Costs shall be provided to the Authority.

35.2.  The Certificate of Costs shall set out the Service Provider's actual costs, expenses and profits in providing the Services over the preceding Contract Year including the following details:-

35.2.1.  actual Capital Expenditure, including capital replacement costs;

35.2.2.  actual operating expenditure relating to the provision of the Services with an analysis showing the costs of staff consumables sub-contracted and bought in services;

35.2.3.  all interest expenses and other third party financing costs incurred in relation to the Services;

35.2.4.  details of the overhead recoveries that have been made in relation to the Services; and

35.2.5.  the profit which the Service Provider or Key Sub-Contractor has achieved in the provision of the Services including any profit element forming any part of the overhead recoveries disclosed by reason of clause 35.2.4 above or any part of sub-contracted or bought in services from Key Sub-Contractors or Affiliates.

35.3.  Following receipt of the Certificate of Costs the Service Provider shall provide to the Authority such additional information as it may reasonably request so that the Authority can verify the accuracy of the Certificate of Costs. The Authority shall have the right to appoint an independent third party auditor ("Auditor") not being a direct competitor of the Service Provider on confidentiality terms substantially the same as those set out in clause 23 (Information and Confidentiality) to verify the Certificate of Costs.

35.4.  The Auditor shall be paid for by the Authority unless the Certificate of Costs prepared by the Service Provider is found to be manifestly inaccurate, incomplete or misleading in which case the Service Provider shall to solely responsible for paying the Auditor's costs.

35.5.  The Service Provider shall allow the Auditor and its authorised agents the right of reasonable access to (and, the right to take copies of) the books of account and other source data in whichever form held of the information identified in any Financial Model or such other information as may be necessary or reasonably desirable for the purpose of verifying the Certificate of Costs or for the purpose of monitoring and calculating the Service Provider's profit margins and applying the provisions of the Payment Mechanism (Schedule 4).

35.6.  The Certificate of Costs may be used by the Authority for verification of cost expenditure or estimated expenditure in particular but without limitation for the purpose of calculating the effect of a Change, introduction of Further Services or Qualifying Change in Law or compensation payable on Termination.