CommLaw Monitor News and analysis from Kelley Drye’s communications practice group Wed, 03 Jul 2024 07:34:31 -0400 60 hourly 1 Flurry of USF Audit Reports Expected by End of Year, Random Audits to Return in FY 2019 Mon, 29 Oct 2018 12:19:48 -0400 We attended the Audit Committee meeting at USAC’s quarterly business meeting this morning. While much of the discussion concerned internal controls USAC has in place to oversee its functions, the business update portion of the meeting gave us a snapshot into contributor and beneficiary audit activity at USAC. The presentation gave us some insight into a likely increased amount of activity over the next few months.

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.

Performance Review Time: Congress Requests GAO Audit of Enforcement Bureau Management Tue, 27 Oct 2015 21:13:54 -0400 US Capitol BuildingMembers of the House Subcommittee on Communications and Technology (Committee) issued a letter late last week requesting that the Government Accountability Office (GAO) conduct an audit of the FCC’s Enforcement Bureau (Bureau). The audit would focus exclusively on the Bureau and address its backlog of consumer complaints, its output and performance metrics and recent management decisions. Among the primary concerns for the Committee is the Bureau’s continued use of the number and monetary value of enforcement actions as the metrics to determine the success of its enforcement efforts.

This is not the first time that the GAO has reviewed the FCC’s procedures and management. In 2008, the GAO conducted a complete audit of the FCC and issued a report concluding that there were insufficient procedures in place in the Bureau and that unless the FCC implemented “key management tools” it may be difficult for the FCC to convince Congress that it is living up to its enforcement mission of “protecting the consumer, ensuring public safety and encouraging competition.” GAO provided a slew of recommendations for the FCC to improve its procedures.

Since the 2008 report, the Committee has requested several updates from the FCC on improvements to its internal processes, including a June 4, 2014 letter to Chairman Wheeler and in an April 2015 hearing. The FCC’s responses apparently left certain members of the Committee with serious reservations about the effectiveness of the Bureau’s management and its enforcement activities.

The Committee referenced several issues as the basis for its current request: the Bureau’s ineffective review of TCPA complaints, the dramatic decline in enforcement for pirate radio operations, and the Bureau’s decision to close 11 of the 24 field offices across the country. As a result, the Committee asked the GAO to consider several questions that target the effectiveness of the Bureau’s enforcement activities:

  1. Has the FCC implemented performance measures and performance goals consistent with GAO’s 2008 recommendations? If not, how does the FCC measure the effectiveness of the enforcement program?
  2. In the intervening seven years, would GAO recommend additional or revised recommendations to the FCC in effectively tracking the effectiveness of the FCC enforcement program?
  3. Is the FCC’s Enforcement Bureau meeting its mission of protecting the consumer, ensuring public safety, and encouraging competition? What changes should be made to improve performance to ensure that consumers are being protected and FCC leadership is accountable?
  4. The FCC has invested millions of dollars in IT improvements in the Enforcement Bureau and the Consumer & Government Affairs Bureau since 2007. How much has the FCC spent on these improvements? Have these improvements lead to an improved enforcement program at the FCC to the benefit of consumers and other stakeholders?
There is no deadline for a GAO report. However, this letter clearly demonstrates that Republican members of Congress are taking notice of the new management and focus at the Enforcement Bureau. It remains to be seen what, if any, changes the Bureau might make to respond to these concerns.

GAO Audit Finds USAC Audits Lacking in Controls Tue, 02 Nov 2010 09:02:11 -0400 The Government Accountability Office (GAO) recently released a study of the FCC's e-rate program controls. The GAO study recommended that the FCC conduct a "robust risk assessment" of its e-rate program and revise the internal control structure of the program. What caught our eye, however, was the commentary on USAC's e-rate beneficiary audits.

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.