Program Integrity

BCAP

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

Beneficiary and service provider audits may be performed by USAC’s internal audit staff, the FCC Office of Inspector General, Inspectors General of other federal agencies, or a firm under contract to USAC or the FCC. Please feel free to contact the USAC Internal Audit Division (IAD) 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 quantity, size, and dollar value of the applications involved.

How USAC Conducts Its Audits

USAC obtains documentation to support the:

• applicant eligibility,
• competitive bidding process,
• National School Lunch Program (NSLP) discount calculations,
• technology planning,
• disbursements,
• Children’s Internet Protection Act (CIPA), and
• delivery or installation of eligible products and services.

To prepare for an audit, you should have some 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

• Entity did not retain documentation to show compliance with competitive bidding requirements

• Entity did not retain documentation to support discount calculation data as indicated on the FCC Form 471, Description of Services Ordered and Certification Form
• Discrepancies existed in the total student and/or NSLP student count
• Entity did not retain a copy of the Technology Plan Approval letter
• The non-discount portion of the cost of services provided was not paid
• Service provider bills did not list the details of services and/or equipment provided
• The applicant could not produce copies of all service provider bills received
• Equipment and/or services were ineligible
• Equipment was not installed
• Equipment could not be located
• The applicant was unable to make effective use of the discounted services
• Consortium was missing Letters of Agency (LOA)

Steps to Minimize Audit Findings

• Document, document, document
• Organize application documentation in a logical manner
• Throughout the funding year, obtain copies of necessary documentation (i.e., copies of service provider bills, cancelled checks, contracts, equipment delivery documentation, maintenance documentation, etc.) and keep in a central location
• Keep equipment inventory up-to-date
• Perform reconciliation of service provider bills with invoices submitted to USAC using the FCC Form 472 (BEAR), and with reimbursements received from service providers

Steps for Service Providers to Minimize Audit Findings and Assist Applicants

• Document, document, document
• Provide sufficient detail on bills
• Include items such as Funding Request Numbers (FRNs), specific details of the items purchased such as serial numbers, quantity, product descriptions, and product delivery information
• On bills, indicate the total amount due less amounts paid by or to be paid by USAC ("Pre-Discount Amount")
• Indicate payment terms of the net amount of the bill
• Separate eligible items from ineligible items
• Best practice is to generate separate bills for eligible and ineligible items to reduce risk of the applicant or service provider including an ineligible item on an FCC Form 472 (BEAR) or FCC Form 474 (SPI)
• Complete BEAR or SPI by using one line per customer bill

 How You Can Help

• Provide requested documentation in a timely manner
• Ask questions to ensure that you are providing adequate documentation
• Maintain documentation related to the application for, receipt, and delivery of discounted services and equipment for at least five years after the last date of service