The 11th Annual Update will address the following, among other topics:

• The Rural Digital Opportunity Fund ("RDOF");
• Significant modifications to the Rural Healthcare and Lifeline programs;
• The proposal by the state members of the Joint Board to modify the contributions mechanism; and
• The FCC’s proposed new suspension and debarment rules.

CLE credit is available for this webinar.

Highlights from the 10th Annual Update will include:

• Unpacking the first significant revisions to the Form 499-A Instructions in several years.
• What’s next for the E-rate program after the amortization waiver and Category 2 budget recommendations.
• The impact of NaLA v. FCC on proposals to modify the Lifeline program.
• The transition to High Cost Phase II support and increases in the Rural Healthcare budget.
• Prospects for contributions reform in 2019.

Probably the most significant take-away was an acknowledgement by USAC’s VP of Audit & Assurance that USAC audit output had slowed significantly in the middle of 2018. She attributed this to personnel turnover and a temporary shift in resources to assist an investigation at the FCC’s request. Nevertheless, USAC announced that it was back on track and planned to “close out” the remainder of its open audits by the end of the year. For those with audits that are underway, expect to see final reports soon, and to face an appeal deadline as early as January 2019.

Going forward, USAC announced a shift in its methodology for selecting audits to conduct. Since 2015, the FCC has directed that USAC apply a risk-based methodology to select its audits. Under this risk-based methodology, USAC generally would conduct audits of high-revenue filers, either based on total revenues or targeted revenues. This approach, as we noted before, is consistent with recommendations from the GAO on USAC contribution audits. However, beginning in 2018, and continuing into 2019, USAC intends to conduct a mix of random audits, risk-based audits and “targeted” audits based on referrals from the FCC or whistleblower tips. For filers, this change means that the universe of potential recipients will expand, and that no filer is immune from receiving an audit notice.

Finally, the meeting gave us insight into the next round of PQA audits that will begin in November. A PQA audit, or a “Payment Quality Assurance” audit, is a targeted inquiry, principally focused on whether a USF beneficiary has sufficient documentation to justify payments made by the Fund to recipients. It is used to calculate the program-wide improper payment percentages, but results may lead to recoupment of improperly disbursed USF payments as well. For FY 2019, the PQA announcements will begin next month (in November), with a target completion by August 2019 in order for the statistical analysis to be completed by the end of the FCC’s fiscal year. One notable change in FY 2019 is that PQAs will once again include Rural Healthcare Fund recipients. The FCC had ordered an end to those PQAs in 2015, after an improper payment rate of zero percent was found. However, based in part on a notable Rural Healthcare NAL , the FCC directed USAC to include Rural Healthcare recipients in the pool this year. As noted, PQA announcements should be sent soon, so if you’re a recipient, please be on the lookout for the notice and documentation request.

In this 5th annual webinar, Kelley Drye will walk you through the USF changes you need to know, with a focus on changes affecting the 2014 Form 499-A. We also will discuss how to ensure compliance during the year and offer tips for handling USF audits, PQAs, Lifeline IDVs and related inquiries. Our speakers will offer analysis and practical advice based on frontline experience in audits and appeals, and years of providing compliance and enforcement advice in this area.

The following topics will be addressed:

• Major Changes in the Fund’s Programs During 2013
• Changes to Reseller Revenue Procedures in 2014
• Changes in the 499-A Form and Instructions
• Significant Developments in the USF Audit and FCC Appeal Processes
• Lifeline, Contributions and E-rate Enforcement Actions

Steve Augustino, Partner

John Heitmann, Partner

Date:

February 27, 2014 12:00 PM - 1:00 PM EDT

Location:

Webinar

Additional Information:

Please click here to register or contact Alexandra Meaza at 202.945.6674.

This webinar is free of charge. Presentation slides and a recording of the webinar will be available to registrants.

The GAO criticized USAC's beneficiary audits as lacking documented and approved policies and procedures. As a result, "[USAC] management may not have the assurance that control activities are appropriate and properly applied." It specifically criticized USAC for not using information gathered from the audits to assess and modify the e-rate program's internal controls. As an example, the GAO noted that of 64 beneficiaries that were audited multiple times over a three year period, 56 percent of the beneficiaries (36 of 64) had the same audit finding in multiple years.

The full GAO report is available here.