Audits of Beneficiaries Fact Sheet

The Universal Service Administrative Company (USAC) and the Federal Communications Commission (FCC) routinely perform audits of beneficiaries of the Schools and Libraries Support Mechanism (the E-rate). The purpose of these audits is to ensure that beneficiaries and service providers receiving financial support under the E-rate are complying with FCC rules and regulations. Many of the audit sites are randomly selected, and the selection process is designed to provide a wide variety of entities with regard to applicant size, discount percentage, and geographic location. Selection for an audit is not necessarily an indication that USAC believes problems exist.

Beneficiary audits may be performed by USAC internal audit staff, the FCC Office of Inspector General, Inspector General Offices of other federal agencies, or a firm under contract to USAC or the FCC. Please feel free to contact the USAC Internal Audit Department at (202) 776-0200 if you have any concern as to the proper identity of any individual contacting you regarding an audit. Typically a beneficiary will be contacted two to three weeks prior to the start of an audit to assure that the appropriate personnel and documentation will be available. The anticipated duration of an audit can vary depending on the quantity, size and dollar value of the applications involved.

To prepare for your audit, you should have the following documentation readily available for the auditors:

Bidding

• Overview of the service provider selection process including criteria and weighting of the criteria
• RFPs issued
• Copies of all bids received (winning and losing)
• Contracts for supported services
• Copy of procurement policy and procedure
• Bid evaluation documentation including evaluation worksheets
• List of all service providers supplying E-rate services including contact information
• If applicable, copies of state and local procurement regulations and procedures
• Any other available documentation concerning bid evaluation

Disbursements

• Detailed procedures for validating and processing vendor bills and submitting invoices to SLD (if applicable)
• Documentation verifying date of receipt of equipment
• Copies of invoices (BEAR Forms) for supported services
• Reconciliation by FRN of vendor bills to invoices submitted to SLD
• Documentation of any SPIN change request including copy of notice to original service provider
• Documentation of payment (canceled checks) of payment for E-rate services to service providers
• Documentation or receipt and deposit of any amounts received for BEAR invoices

Children’s Internet Protection Act (CIPA)

• Copy of the Internet safety policy
• Documentation of the adoption of the Internet safety policy
• The date and a copy of the minutes of the public hearing regarding the Internet safety policy
• Copies of Forms 479 and/or Forms 486, as applicable

Services

• Copy of the technology plan(s) and approval letter(s) covering the complete year under review
• Summary of the technology environment and a high-level network diagram
• Any other documentation on the services (such as training and workstations) necessary to make effective use of E-rate discounts
• List of E-rate equipment including references to vendor bill, SLD invoice, serial number, and current physical location

Other

• OMB A-133 audit, if applicable
• Reports of any other audits conducted that relate to either the E-rate program or the NSLP.
• Copies of financial statements and annual budgets for the year(s) under review
• Documentation and supporting worksheets for the discount calculation
• Copy of the records retention policy
• Description of the E-rate team including staff, service providers, and consultants. This description should contain their roles and responsibilities.
• Any correspondence from or to USAC, the FCC, potential E-rate service providers, or any E-rate team member
• For consortia, letters of agency

Additionally, you should have the following people available to answer questions:

• Person who managed the bidding and award process
• Person who reviews and approves vendor bills
• Person who prepares E-rate invoices
• Person who writes checks, makes deposits, and reconciles the bank account
• Person knowledgeable about the network and the location of equipment.