In USAC's continuing efforts to ensure carriers are successful at implementing FCC rules and program requirements, we have put together a list of some of the most common problem areas identified during audits and Payment Quality Assurance (PQA) reviews.
For more information about the audit process, review the Beneficiary and Contributor Audit Program (BCAP) page, which includes a checklist of documentation you should maintain for audit purposes. Using all of this information will help to expedite the audit process and should reduce or eliminate audit findings in the future.
Visit Trainings and Outreach for upcoming training events, weekly news briefs, reference materials, webinars, and online tutorials to learn more about how to succeed in the program.
For each common audit finding, we have outlined a description of the finding and some ways to prevent a finding like this in the future. We've also, where possible, provided some examples.
E-rate Program non-compliance is most often caused by an inadequate knowledge or familiarity of program rules. In addition, program documentation is often not retained properly.
Applicants and service providers did not have adequate documentation to demonstrate compliance with FCC rules.
A school or library did not retain documentation to show compliance with competitive bidding requirements. Often there is staff turnover at a school/library, and E-rate Program knowledge is not shared or passed on.
During the competitive bidding process and throughout the funding year, retain copies of necessary documentation (i.e., copies of bid evaluation matrix, winning and losing bids, service provider bills, cancelled checks, contracts, equipment delivery documentation, maintenance documentation, etc.) and keep in a central location. The documentation should be maintained for 10 years after the last date services are provided for a particular funding year. Make sure your document retention system is sustainable.
The service provider did not retain documentation to demonstrate that they offered the applicant the lowest corresponding price for services.
Service providers should implement internal controls and procedures to maintain documentation which shows that applicants were offered the lowest corresponding price pursuant to E-rate Program rules. The documentation should be maintained for 10 years after the last date services are provided for a particular funding year.
A school, library, or service provider invoiced USAC for ineligible equipment and services which were: not supported by bills to the applicant, were not requested on the FCC Form 471, and/or were not approved for E-rate Program funding.
The school or library did not deduct ineligible charges when completing and submitting the FCC Form 472, the Billed Entity Applicant Reimbursement (BEAR) Form, to USAC.
You should establish internal controls such as a reconciliation and review of eligible and ineligible charges on each invoice that is being submitted to USAC. This will ensure that you only request reimbursement for the cost of eligible products and services. Learn more by reviewing the Eligible Services List.
The total amount reflected on FCC Form 474, the Service Provider Invoice (SPI) Form, submitted by the service provider exceeded the total amount of the related applicant customer bills.
Service providers should implement internal controls and procedures to review all FCC Forms 474 to ensure that ineligible charges are removed prior to submitting the form to USAC. USAC should only be invoiced for eligible charges approved on the Funding Commitment Decision Letter (FCDL).
Applicants should monitor amounts being submitted by and reimbursed to its service providers by reviewing your Quarterly Disbursement Reports and the Data Retrieval Tool. Applicants should implement a control procedure, such as a reconciliation, that compares the invoices submitted to USAC by the service provider (via the SPI process) to the customer bills submitted to the applicant by the service provider.
The school or library did not pay their non-discounted share to their service provider within 90 days.
The school or library misplaced the service provider's bills, or the applicant was waiting for bill credits before making payment.
Schools and libraries should:
Documentation to support the monitoring of reimbursements should be maintained for 10 years after the last date services are provided for a particular funding year.
The service provider did not invoice the school or library.
Service providers are required to bill their E-rate Program customers for the non-discount portion of the cost of the goods and services. Service providers should implement internal controls and procedures to ensure they bill their customers for the non-discounted portion once services and/or equipment is delivered and installed.
The applicant was not compliant with the Children's Internet Protection Act (CIPA). Their Internet Safety Policy (ISP) did not address all of the three required elements under CIPA and they did not have documentation that a public hearing or public notice was posted addressing the ISP.
The school or library certified on FCC Form 486 that it was in compliance with the provisions of the Children's Internet Protection Act (CIPA). However, they weren't using their Internet filter. The school or library also did not provide reasonable public notice and hold at least one public hearing to address a proposed technology protection measure and ISP.
Make sure your school or library's CIPA policy contains the following three requirements: Internet Safety Policy, Technology Protection Measure, and a Public Notice or Hearing/Meeting.
Learn more specifics on the CIPA page.
The school, library, or other entity that received service was not eligible to receive E-rate Program discounts.
The school or library received reimbursement for products and/or services provided to ineligible entities either not identified in the related FCC Form 471 or not defined as eligible entities by program rules.
When filing FCC Form 471, make sure you list all eligible entities as recipients of service. Also describe all requested, discounted products and services in the "Funding Requests" section of the FCC Form 471. Carefully review the recipients of service when filing the form and note any ineligible costs associated with products and/or services that will be received by ineligible entities. Additionally, when services start, review service provider bills to ensure that you are billed correctly. Remove costs associated with ineligible entities from invoicing forms when submitting them to USAC for payment.