Program Integrity

BCAP

The primary purpose of audits is to ensure compliance with Federal Communications Commission (FCC) rules and program requirements (the Rules) and to assist in program compliance. Many of the audits are randomly selected, and the selection process is designed to provide a wide variety of entities with regard to size and geographic location. Selection for an audit is not necessarily an indication that USAC believes problems exist.

Beneficiary audits may be performed by USAC’s internal audit staff, the FCC Office of Inspector General, offices of other federal agencies, or a firm under contract to USAC or the FCC. Please feel free to contact the USAC Internal Audit Division at (202) 776-0200 if you have any concern as to the proper identity of any individual contacting you regarding an audit.

An announcement letter will be sent detailing the purpose and scope of the audit, identifying the personnel who will be performing the audit, making a request for pertinent data, and stating the date upon which the data is due. Typically a beneficiary will be contacted by USAC two to three weeks prior to the start of an audit to assure that the appropriate personnel and documentation will be available. The anticipated duration of an audit can vary depending on the size and dollar value of the universal service support involved.

How USAC Conducts Its Audits

USAC obtains documentation to support the:

• Number of subscribers reported on the FCC Form 497
• Amounts reported on the FCC Form 497
• Beneficiary eligibility to receive Lifeline Program support
• Subscriber eligibility to receive Lifeline Program support
• Lifeline Program support passed through to subscribers
• Adequacy of advertising efforts

To prepare for an audit, you should have the following documentation readily available for the auditors.

Audit Reporting

A USAC audit may identify conditions that are categorized as an audit finding or an "other matter." An audit finding is a condition that shows evidence of noncompliance with FCC regulations and orders set forth primarily in 47 C.F.R., as well as other program requirements (collectively, the Rules). An "other matter" is a condition that does not necessarily constitute a Rule violation, but warrants the attention of the auditee and USAC management. The audit findings and "other matters" will contain background information, the audit step performed, the condition noted, and the basis for the condition noted. After the audit is completed, an exit conference will be held with the auditee to review the results of the audit and the next steps of the process.

The auditee will be given an opportunity to provide a response to the audit findings and "other matters" (if any) within five business days – unless advised otherwise by the auditor. USAC management will review the auditee's response, and will prepare a response to address the conditions and note corrective actions as necessary.

Both the auditee and USAC management responses will be incorporated into the draft report and submitted to the USAC Board of Directors to be deemed final. The USAC Board of Directors may request USAC management to reassess any aspect of the report prior to the report becoming final. Once finalized, both the auditee and the FCC will receive copies of the audit report. The final report may be made available to the public upon request.

Common Audit Findings

• Number of subscribers reported on the FCC Form 497 does not agree to billing reports/summary schedules or subscriber listing
• Subscriber listing contains duplicate addresses and/or telephone numbers
• Duplicate claims exist between the beneficiary’s subscriber listing and another carrier’s subscriber listing
• Amounts reported on the FCC Form 497 do not agree to supporting calculations and/or tariffed amounts
• Subscriber certifications are not completed or are incomplete
• Enrollment/eligibility procedures do not comply with state and/or federal requirements
• Lifeline Program support provided to the beneficiary is not passed through to subscribers
• Subscribers are charged for services that are free under the Lifeline Program
• Toll Limitation Service (TLS) is required for Lifeline subscribers

Steps to Minimize Audit Findings

• Document, document, document
• Ensure the subscriber listing contains all the requested information
• Verify the provided documentation relates to the audited period and study area
• Provide detailed explanations for any reasons why the FCC Form 497 claims do not agree to supporting documentation

How You Can Help

• Provide requested documentation in a timely manner
• Ask questions to ensure that you are providing adequate documentation
• Maintain documentation for three years for data submitted to USAC
• Maintain subscriber eligibility documentation for as long as the subscriber receives Lifeline Program support

If you have any questions, please contact USAC's Internal Audit Division via email.