Program Integrity

Audits & Assessments

Beneficiary and Contributor Audit Program (BCAP) audits enable USAC to utilize audit approaches tailored to both the distinctive features of an auditee's organization and the specific amounts of money being audited. Carried out by auditors trained in universal service fund (USF) and support mechanism audit requirements, these audits serve to identify areas of non-compliance with program rules and amounts of recoverable funds. The audits are designed and conducted so as not to impose undue demands in time or energy on auditees. USAC has worked closely with the FCC to develop and implement this program. 

How USAC Conducts Its Audits

The primary purpose of audits is to ensure compliance with Federal Communications Commission (FCC) rules, FCC orders, and the FCC Form 499-A Instructions. Many of the audits are randomly selected, and the selection process is designed to produce a sample of auditees that can vary widely in size and revenue type.

Contributor revenue audits may be performed by USAC’s internal audit staff, the FCC Office of Inspector General, offices of other federal agencies, or a firm under contract with USAC or the FCC. Please feel free to contact the USAC Internal Audit Division at (202) 776-0200 if you have any concern as to the proper identity of any individual contacting you regarding an audit.

An announcement letter will be sent detailing the purpose and scope of the audit, identifying the personnel who will be performing the audit, making a request for pertinent data, and stating the date upon which the data is due. Typically a carrier will be contacted by USAC 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 size of the carrier, number of products, and revenue involved.

USAC obtains documentation to support the:

• Completeness of revenue
• Block 3 reporting
• Classification of products
• Jurisdiction allocation
• USF recovery charges and associated reporting

To prepare for an audit, you should have certain documentation readily available for the auditors.

Audit Reporting

A USAC audit may identify conditions that are categorized as an audit finding or an "other matter." An audit finding is a condition that shows evidence of noncompliance with FCC regulations and orders set forth primarily in 47 C.F.R., as well as the FCC Form 499-A Instructions. (collectively, the Rules). An "other matter" is a condition that does not necessarily constitute a Rule violation, but warrants the attention of the auditee and USAC management. The audit findings and "other matters" will contain background information, the audit step performed, the condition noted, and the basis for the condition noted. After the audit is completed, an exit conference will be held with the auditee to review the results of the audit and the next steps of the process.

The auditee will be given an opportunity to provide a response to the audit findings and "other matters" (if any) within five business days – unless advised otherwise by the auditor. USAC management will review the auditee's response, and will prepare a response to address the conditions and note corrective actions as necessary.

Both the auditee and USAC management responses will be incorporated into the draft report and submitted to the USAC Board of Directors to be deemed final. The USAC Board of Directors may request USAC management to reassess any aspect of the report prior to the report becoming final. Once finalized, both the auditee and the FCC will receive copies of the audit report. The final report may be made available to the public upon request.

Common Audit Findings

• Documentation to support revenue reported as carrier’s carrier revenue is not adequate
• Products are not reported on the correct lines of FCC Form 499-A
• Telecommunications revenue is incorrectly reported as non-telecommunications revenue on Line 418 of the FCC Form 499-A
• Non-telecommunications revenue is incorrectly reported as telecommunications revenue
• Documentation to support private line jurisdiction is not maintained
• Estimates for products and jurisdiction are not properly maintained
• Carrier incorrectly applied safe harbor percentages
• Carrier incorrectly recovered USF
• USF amounts recovered are not correctly reported on the FCC Form 499-A, Line 403
• State USF recovery charges on FCC Form 499-A are not properly reported

Steps to Minimize Findings

• Obtain an understanding of FCC Form 499-A reporting requirements per the Rules
• Retain appropriate and adequate documentation to support product and jurisdiction reporting
• Maintain documentation to support revenue classified as carrier’s revenue
• Review data reported for accuracy prior to submission to USAC

How You Can Help

• Provide requested documentation in a timely manner
• Ask questions to ensure that you are providing adequate documentation
• Maintain documentation, for five years, for data submitted to USAC