What to expect from your USAC USF audit

Rural Telecommunications, Sept-Oct, 2008 by Karlen Reed

The letter states the anticipated time needed for field work at the company's location. Significantly, the letter states the response time for the initial round of document requests--typically a very short time of 10 business days or two weeks from the date of the notification letter.

The USAC announcement letter varies in content and describes more fully the nature of the compliance attestation examination to determine the company's compliance with FCC rules and orders governing the USF high-cost program. The company also must provide a management representation letter to be detailed during a subsequent meeting with the audit team. Typically the auditor gives the anticipated start day--often as early as three weeks after the date of the audit letter. The letter provides additional contact information for the audit team leaders and other matters, such as requests about the audit team's need for office space and Internet connections at the company's location, office dress code, and directions to and overnight lodgings near the company's location. Finally, the announcement letter refers the company to the USAC High-Cost Program Web site, http://www.universalservice.org/hc, for further information about the audit program.

The FCC OIG announcement letter is a fairly standardized letter from the OIG acknowledging the hiring of the audit team and stating that your company was selected at random for audit. This letter reminds the company that it must allow the audit team access to company records, documents and information needed to complete the audit. Failure to cooperate with the audit team may be viewed as a failure to comply with FCC audit rules and may result in enforcement actions through penalties, fines or forfeitures. The letter closes with contact information for the OIG.

The initial document request list included in the packet is perhaps the most complex element in the audit process, as it names the documents and information to be produced within a 10-14 day window. One list provided to NTCA requested information from 18 different categories, including: 1) Eligible Telecommunications Carrier (ETC) designation letter; 2) annual rural use certification; 3) annual report with audited financial statements and trial balance; 4) documents supporting quarterly line count data; 5) Forms 507, 508, 509 for Interstate Common Line Support; and 6) Forms 499-A. The list asks that responses be sent by e-mail whenever possible. Furthermore, the list provides that a final closing meeting will occur to discuss results. Final results are to be presented in a draft report to USAC and FCC OIG. After review by FCC and USAC, the report is to be distributed to parties. Parties have 60 days to appeal a USAC finding.

NTCA has received many complaints about the short response time given the vast quantities of data requested. Completing the required documentation requests will take time and preparation. One NTCA member said, "Since receiving the first notification for information ... it has literally taken a full-time person and help from others to fulfill their request. The most time is spent digging out old records and making copies." Another NTCA member reported that the initial data request sought 42 items. "It has been a bit trying," a third member said. Another said the initial request was "just the tip of the iceberg," and has since received numerous follow-up questions. Still another member said, "I can report that they are asking for a tremendous amount of information." Other NTCA members stated that the auditor wanted the companies to provide 45 bill images for review.