Audit Plan Proposal Released by FCC; Comments Sought

On September 30, the FCC released a proposed Lifeline Biennial Audit Plan and requested comment from the public on the plan.

In its February 2012 Lifeline Reform Order, the FCC created a new requirement that each eligible telecommunications carrier (“ETC”) that receives $5 million or more in annual Lifeline funding (based on 2013 funding) must conduct an audit every two years.  The first round of audits will begin in 2014 upon release of the final Lifeline Biennial Audit Plan, and will cover a one month period for all the ETCs’ study area codes.  (Current USAC procedures typically focus on one study area per audit.)  ETCs must hire an audit firm to assess the ETC’s overall compliance with the FCC’s Lifeline rules.

The firms conducting the audits must be independent, licensed, certified public accounting firms and must conduct the audits consistent with Generally Accepted Government Auditing Standards. USAC will conduct training for auditing firms.  The role of ETC employees will be limited to providing general assistance to the auditors in the preparation of schedules and the gathering of data. The audits will review carrier processes and procedures related to:  (1) carriers’ obligation to offer Lifeline; (2) consumer qualification for Lifeline; (3) subscriber eligibility determination and certification; and (4) annual recertification and recordkeeping.  Details are set forth in the comprehensive (48-page) proposed plan linked above, but several highlights include:

• once the audit report becomes final, it becomes a public document that must be filed with the FCC, USAC and all relevant state commissions;
• an extensive, 42-question “background questionnaire” that largely follows the existing audit questionnaires used by USAC auditors;
• fieldwork, including the monitoring of 10 random incoming telephone calls to customer care and the collection of marketing materials;
• a search for intra-company duplicates among the ETC’s list of all Lifeline subscribers nationwide for a particular month;
• the examination of certification forms for at least 50 (or possibly 100) Lifeline subscribers; and
• a review of randomly selected communications sent to subscribers regarding non-usage, recertification and de-enrollment

Comments on the proposed audit plan will be due 30 days after its publication in the Federal Register, and reply comments will be due 45 days after publication.  We will update this blog post once publication has occurred and the comment dates have been established.

Update:  The FCC has announced  that initial comments in response its proposed Lifeline Biennial Audit Plan are due by December 13.  Reply comments must be filed by December 30.

DWT presented a webinar on November 19, 2013 that provided guidance on how to best prepare in advance for these audits.