Common Findings: E-Rate Program
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Audit Findings
Relevant FCC Rules
- 47 CFR § 54.501
- 47 CFR § 54.502
- 47 CFR § 54.507(d)
- 47 CFR § 54.507(b)
Description of Finding
This finding occurs when there are discrepancies in the invoices submitted for E-Rate reimbursement. Common issues include charges for ineligible locations, ineligible services and/or equipment, and costs exceeding the approved amounts. These errors can result from:
- Ineligible Locations: Charges are applied to locations that do not meet the eligibility criteria for E-Rate funding. For example, services provided to a library operating as a for-profit business were billed for discounts despite not being eligible under the program’s guidelines.
- Ineligible Services/Equipment: Some services or equipment billed under the E-Rate program may not qualify for discounts. For instance, charges for computers or tablets that are not considered eligible under the program.
- Costs Exceeding Approved Amounts: Certain invoices include amounts that exceed the funding authorized in the Funding Commitment Decision Letter (FCDL). These overages were not justified or supported by program rules.
Applicants must ensure that only eligible services and equipment are billed under the E-Rate program, and that invoiced costs align with the amounts specified in the FCDL.
Relevant FCC Rules
- 47 CFR § 54.503
- 47 CFR § 54.503(c)(4)
- 47 CFR § 54.504(a)
- 47 CFR § 54.516(a)(1)
- 47 CFR § 54.516(b)
Description of Finding
This finding occurs when applicants do not fully comply with the competitive bidding requirements of the E-Rate program. Key issues include:
- Failure to Conduct a Fair and Open Competitive Bidding Process: The competitive bidding process must be transparent, open to all eligible service providers, and free from bias. Restrictions or requirements that limit competition unfairly can lead to findings of noncompliance.
- Inadequate Documentation of the Competitive Bidding Process: Applicants must keep detailed records of their competitive bidding activities, including Requests for Proposal (RFPs), bids received, and evaluation criteria. Lack of sufficient documentation can result in audit findings.
- Failure to Select the Most Cost-Effective Bid, Even When Only One Service Provider Bid is Received: Price must be the primary factor in evaluating bids. Applicants who do not choose the most cost-effective option are not acting in compliance with FCC rules. Additionally, if only one service provider bid is received, applicants must ensure that the offering is cost-effective prior to awarding the contract to the bidding service provider.
- Contracting Before Completing the Competitive Bidding Process: Entering into a contract before the 28-day minimum posting period or before the bidding process is fully completed can result in recovery of disbursed funding and downward adjustment of committed amounts.
The E-Rate program requires a fair and open competitive bidding process to ensure that all applicants receive the best value for eligible services. Noncompliance with these rules can disqualify funding requests or lead to repayment of disbursed funds.
Relevant FCC Rule
- 47 CFR § 54.523
Description of Finding
This finding occurs when beneficiaries fail to make the required non-discount portion payment for equipment or services received under the E-Rate program. Common errors include:
- Failure to Pay the Non-Discount Portion: Schools or libraries fail to pay the non-discount portion of services within 90days.
- Inadequate Documentation of Payments: Applicants do not maintain proper records or proof of payments made to service providers for the non-discount portion.
Failure to pay the non-discount portion on time can result in the disqualification of E-Rate funding or require the repayment of improperly disbursed funds. It is critical to ensure that these payments are made and documented properly to remain compliant with the program.
Relevant FCC Rules
- 47 CFR § 54.516(a)
- 47 CFR § 54.516(b)
Description of Finding
This finding occurs when beneficiaries fail to retain adequate records for the required 10-year retention period under the E-Rate program. Issues may include:
- Ineligible Location Documentation: Applicants fail to maintain records that verify the eligibility of locations where E-Rate-funded services were provided.
- Missing or Incomplete Equipment Records: Schools, libraries, and consortia fail to retain asset and inventory records for internal connections equipment, making it difficult to verify the location of purchased equipment.
Applicants must retain all relevant documentation, including service delivery records and inventory information, for at least 10 years after the last day of the funding year or the service delivery deadline. Missing records or failure to produce them during an audit can result in the recovery of improperly disbursed funds.
Relevant FCC Rule
- 47 CFR § 54.520
Description of Finding
This finding occurs when applicants fail to comply with the Children’s Internet Protection Act (CIPA), which is a requirement for receiving E-Rate discounts on internet access and internal connections. Common issues include:
- Inadequate or Missing Technology Protection Measures: Schools or libraries do not have adequate filtering or blocking measures in place to protect minors from harmful content, as required by CIPA.
- Failure to Maintain an Internet Safety Policy: Applicants may not have an internet safety policy that includes all required components under CIPA, such as monitoring online activities and educating minors on safe internet use.
- Failure to Provide Public Notice and Hold Public Hearings: CIPA requires that applicants provide reasonable public notice and hold a public meeting to discuss their internet safety policy. Failure to meet these requirements can result in noncompliance.
Compliance with CIPA is necessary for receiving E-Rate discounts for internet access and internal connections. Noncompliance with CIPA can result in disqualification from funding under the E-Rate program.
Relevant FCC Rules
- 47 CFR § 54.501(a)
- 47 CFR § 54.504(a)
- 47 CFR § 54.504(b)
- 47 CFR § 54.502(b)(5)
- 47 CFR § 54.502(6)
- 47 CFR §54.513(d)
Description of Finding
An ineligible non-traditional education facility and/or students (e.g., Head Start, Pre-K, Adult Ed, or Juvenile Justice) received E-Rate funding.
Relevant FCC Rule
- 47 CFR § 54.507(d)(4)
Description of Finding
The beneficiary did not install internal connections equipment by the installation deadline.
Relevant FCC Rule
- 47 CFR § 54.502(c)(5)
Description of Finding
The beneficiary did not list all eligible entities receiving services on its FCC Form 471 application.
Relevant FCC Rules
- 47 CFR § 54.500
- 47 CFR § 54.504(c)
- 47 CFR § 54.504(e)
- 47 CFR § 54.516(a)(2)
- 47 CFR § 54.511(b)
Description of Finding
The service provider failed to certify that they provided goods/services to the beneficiary at the lowest corresponding price, defined as the lowest price that a service provider charges for similar services to nonresidential customers who are similarly situated to the beneficiary.