Section 3005

Q33: What do you do if your financial statements come from the auditors in PDF format only?

A33:

PDF format is sufficient. No other format is required.

Q34: If a company sells mid-year, the new owners will ultimately only have an audit review done on the financials for the portion of the year they owned the company and not the entire “fiscal year end.” When it comes time to certify that the financials were audited, how should this be handled?

A34:

The OMB-approved instructions (page 35) state the following, “Annual Report of Privately Held Rate-of-Return Carriers: Any privately held rate-of-return ETC must file a full and complete annual report of the company’s financial condition and operations as of the end of the preceding fiscal year.” This reporting can be handled in the following ways:

Annual RUS reports will satisfy this requirement (Operating Report for Telecommunications Borrowers).
If the carrier is not an RUS Borrower, they have two options.

If the company’s financial statements are audited in the ordinary course of business, your company must attach either a copy of your audited financial statements or a financial report in a format comparable to an RUS Operating Report for Telecommunications Borrowers, accompanied by a copy of a management letter issued by the independent certified public accountant that performed the company’s financial audit.

If the company’s financial statements are not audited in the ordinary course of business, your company must attach either a copy of your financial statements which has been subject to review by an independent certified public accountant or a financial report in a format comparable to an RUS Operating Report for Telecommunications Borrowers with the underlying information subjected to a review by an independent certified public accountant and accompanied by an officer certification that: (a) the carrier was not audited in the ordinary course of business for the preceding fiscal year and (b) that the reported data are accurate.

Filers are responsible for attesting to the financial statements for the entire fiscal year of the SAC they own.

Q35: Line 3012 of FCC Form 481 requires rate-of-return (ROR) ETCs to provide a list of the names, addresses, and the number of community anchor institutions to which the carrier newly began providing access to broadband service in the preceding year. What is meant by “number”? Wouldn’t simply providing a list of anchor institution names and addresses also be providing the number as well?

A35:

The term “number” is included so it would not be required for reviewers to count the entries within the list. A numbered list would be a sufficient response.

Q36: The Rule (CFR Section 54.313(f)(1)(ii)) tied to Line 3012 requires the, “Number, names, and addresses of community anchor institutions to which the ETC newly began providing access to broadband service in the preceding calendar year.” There is a question of the term “newly began providing access.” Does this include all anchor institutions to which the carrier has made broadband available, regardless of whether or not the institution subscribes to the service? Alternatively, is it just those institutions that are actually subscribing to the broadband service?

A36:

In the USF/ICC Transformation Order (FCC 11-161), paragraph 52, it states the following, “We will also require CAF recipients to report on the number of community anchor institutions that newly gain access to fixed broadband services as a result of CAF support.” Thus, a carrier should include all community anchor institutions to which the carrier has made broadband available, regardless of whether the community anchor institution chooses to subscribe to the service.

Q37: Carriers are required to provide information on newly served community anchor institutions. The USF/ICC Transformation Order (FCC 11-161) defines community anchor institutions as “…schools, libraries, medical and healthcare providers, community colleges and other institutions of higher education, and other community support organizations and entities” (footnote 37). Are churches considered “other community support organizations and entities”?

A37:

Carriers can include churches as part of the list they provide of newly served community anchor institutions. Churches can be included in this list, but they are not required to be included.

Q38: What should we do if our audited financials will not be available by the filing deadline, July 1, 2024?

A38:

ETCs that will not have audited financials by July 1, 2024, should seek a waiver of the filing deadline.

Q39: Line 3012 – Community Anchor Institutions. What should be done if we do not have any new anchor institutions in the previous calendar year?

A39:

Filers can indicate from the drop-down that they have no new community anchors to report in which case an attachment will not be required within the system.

Q40: Line 3030: Is Telephone Plant in Service (TPIS) before depreciation, etc. or is that net plant? If a company is providing the RUS form on the balance sheet, would they provide the amount on Line 18 or Line 23?

A40:

If gross TPIS is available, report the gross amount. Carriers may submit the net amount if the gross amount is not available within the attached financial statements. When a carrier is providing the RUS form, the amount should be entered on Line 18.

Q41: Line 3034: Are “Dividends” the amount declared during the year or what was paid?

A41:

Carriers should indicate the amount declared.

Q42: Line 3012: What does "newly deployed" mean?

A42:

“Newly deployed” means both (1) those who never had access to any broadband, and (2) those who had access to lower speeds but now have gained access to 25/3 speeds during the year.

Q43: What documents must privately held rate-of-return carriers that are not RUS borrowers but are audited in the ordinary course of business provide (Lines 3018-3021)?

A43:

Carriers that are not borrowers from RUS have the option of either uploading a copy of their audited financial statement or entering their financials directly to the form (Line 3019). For carriers choosing the former option, they should submit their audit (including audit opinion issued by the independent certified public accountant that performed the company’s financial statement audit) and a management letter. For carriers choosing the latter option, they should enter their financial statements directly in to the form and upload a management letter to line 3021. Those carriers must produce their audit financial statements, audit opinion, and related work papers upon request of the FCC, USAC, or the relevant state commission, relevant authority in a U.S. Territory, or Tribal government, as appropriate.

Q44: For all financial reporting lines (3027-3034), should we report ILEC only numbers or will total company numbers be OK?

A44:

The Rules do not require that the company report ILEC-only financials, thus consolidated numbers would be sufficient.

Q45: For Line 3034 (Dividends), should cooperatives report patronage capital credits, which they deem comparable to dividends paid for a C-Corp?

A45:

To the extent patronage capital credits are deemed comparable to dividends paid for a C-Corp, they should be reported on Line 3034.

Q46: Do you have a specific definition for Anchor Institutions?

A46:

According to footnote 37 of FCC 11-161, the term community anchor institutions includes schools, libraries, medical and healthcare providers, community colleges and other institutions of higher education, and other community support organizations and entities.

Q47: Line 3029: Is “Net Income” asking for just operating net income or total net income? If a company is providing the RUS form on the income statement, would we provide the amount on Line 21 or Line 31?

A47:

Carriers should provide total net income. When providing the RUS form, carriers should enter this number on Line 31.

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