Common Audit Findings: High Cost Program

In USAC’s continuing efforts to ensure compliance with Federal Communications Commission (FCC) rules and program requirements, we have put together a list of some of the most common rule violations identified during audits and Payment Quality Assurance (PQA) reviews of High Cost program recipients.

About These Findings

  • The majority of the audit findings discussed below are applicable to rate of return carriers, specifically cost companies receiving High Cost Loop (HCL) and Interstate Common Line Support (ICLS). Typically, carriers (cost companies) encounter these rule violations when High Cost program support is calculated based on a cost study.
  • These findings (except for the document retention and cut off period findings) are not applicable to rate of return average schedule companies, as their HCL support is determined based on a formula rather than their individual costs, and to competitive eligible telecommunications carriers, who largely receive frozen support. These findings (except for the document retention finding) are also not relevant to carriers that receive Connect America Fund support based on the offer of model-based support, or through a competitive bidding process.
  • If the finding is relevant to any of the above types of support, it will be noted in the “applicable to” line within that section.

For more information about the audit process, review the Beneficiary and Contributor Audit Program (BCAP) page of our website, which includes a checklist for carriers of documentation to maintain for audit purposes. Please note that the checklist is not exhaustive. Our audit team may request additional documentation. Using all of this information will help to expedite the audit process and should reduce or eliminate audit findings in the future.

Audit Findings

For each common audit finding, we have outlined who the finding is applicable to, a description of the finding, a cause for the finding, and some ways to prevent a finding like this in the future. We’ve also, where possible, provided some examples. Scroll through and read about all findings, or jump to the one that interests you:

  • Finding: Inadequate Documentation/Data Retention
  • Finding: Improper Regulated/Non-Regulated Allocation
  • Finding: Improper Account Classification
  • Finding: Inaccurate Reporting of Depreciation/Amortization Expense
  • Finding: Improper Cut Off Periods
    • Line Counts
    • Minutes of Use
    • Revenues
  • Finding: Inaccurate Reporting of Affiliated Transactions
FINDING: Inadequate Documentation/Data Retention
FINDING: Improper Regulated/Non-Regulated Allocation
FINDING: Improper Account Classification
FINDING: Inaccurate Reporting of Depreciation/Amortization Expense
FINDING: Improper Cut Off Periods
FINDING: Inaccurate Reporting of Affiliated Transactions