Late Wednesday, the FCC released the final guidelines for the biennial audits of certain Lifeline service providers, as required by the February 2012 Lifeline Reform Order. The final audit guidelines include some notable revisions to the draft guidelines, on which DWT presented a webinar in November. Many of these changes appear to be the result of industry suggestions to streamline the audit process. Perhaps the most significant new information concerns the timetable of the audit process. ETCs should start this process in the summer of 2014 in order to submit the final audit report to the FCC, USAC, and state authorities by the required deadline of April 2, 2015. The detailed timetable is as follows:
- The auditor completes field work at some point in the fall of 2014.
- Within 60 days, the auditor must submit a draft audit report to the ETC, USAC, and the FCC.
- The ETC will have 30 days to submit comments to the auditor, after which the auditor will present its final report to the ETC. USAC and the Commission may also submit comments to the auditor before the audit report is finalized.
- Following this, the ETC has 30 days to submit the final report to the FCC, USAC, and state authorities, and must do so no later than April 2, 2015.
Based on this timetable, we recommend that ETCs plan to engage an auditor soon after USAC has completed its training session for interested CPA firms, with the auditor’s field work commencing no later than August 2014. Other significant changes include:
- Scope of audit: ETCs will no longer be required to provide subscriber lists for all states in which they operate in the sample month. Instead, ETCs will provide subscriber lists from (i) the state in which the company received the largest amount of Lifeline funding, and (ii) two additional states randomly selected by the auditor. The auditor’s review of the ETC’s recertification process and non-usage monitoring will also be limited to these same three states. However, there will still be some review of company-wide policies, procedures, and marketing materials.
- Audit period: The audit period will now cover a calendar year. The first biennial audits will cover 2013.
- Confidentiality of ETCs’ information: Communications between ETCs and auditors will be treated as confidential, and ETCs will be able to petition the FCC to provide confidential treatment to individual draft audit reports as well. Final reports will be public.
- Monitoring non-usage: ETCs will be required to explain how it monitors non-usage of Lifeline-supported service among subscribers.
DWT will be presenting a webinar on the final audit guidelines in mid-May.