Always be Prepared for an Audit
E-rate audits are increasingly becoming a fact of life for E-rate applicants. The Federal Communications Commission has been allowed to spend more and more money to examine applicants to ensure that they are compliant with E-rate rules and regulations. The key to surviving an E-rate audit is to always be prepared for one by maintaining proper documentation about your E-rate activities.
If you do receive notification that you are to undergo an audit, the quality and detail of the documentation of your E-rate activities will be the primary factor in determining if you are in compliance with program rules. It's important to keep in mind that being the subject of an E-rate audit does not mean that you are suspected of wrongdoing. Audits are just one of the many ways that the FCC and USAC are making sure that E-rate dollars are being committed and used properly.
Ten Year Documentation Rules
A fundamental E-rate rule requires that you maintain all of the documents associated with a funding commitment for a period of ten years from the last date of service. That means that you’ll have a lot of documents covering many years of services at any one time. The list of documentation related to a funding commitment is too long to list here, but covers everything from the technology plan on which the request is based to copies of bank statements showing that you deposited reimbursement checks from your service provider.
Prepare for Audits as You Go
Two questions to continually ask yourself as you go about your "E-rate business" of procuring services, requesting and using funding, and maintaining documents are:
1. Am I doing anything that is in violation of my local rules or E-rate rules?
All applicants know that they must follow all applicable local rules and E-rate regulations. So, it’s a good idea to ask yourself this question on a regular basis. During the course of an audit, if your organization is found to be in violation of local or E-rate rules, it may be required to pay money it received in E-rate discounts back to the program. It could also result in additional scrutiny in future years to ensure that you have appropriately addressed the problems that were found.
2. Do I have the necessary documentation to prove that I am in compliance with E-rate rules and regulations?
This goes beyond just retaining copies of your E-rate forms, bid evaluations, and discount calculation documents. It should also include any additional information that demonstrates your compliance with E-rate rules. Because an audit can cover anything that has happened in the last ten years, don’t just rely on your memory to recall the specifics of a certain situation. Save copies of e-mails, keep a file of notes, and any other documentation that shows you followed both your local rules and E-rate rules.
Maintain Historical Perspective
E-rate rules have evolved and will continue to evolve from one year to the next. You should keep these changes in mind when looking at things your organization did in past years. Through the history of the program, there have been changes in service eligibility, procurement practices, and documentation retention requirements that could potentially come into play during an audit. Knowing the changes in the program can help avoid some audit findings, if you find yourself in a situation where an auditor is applying today’s E-rate rules to activities that took place ten years ago. Through the audit process, you may have to provide this historical perspective to demonstrate your compliance with E-rate rules at the time a given activity took place.
Common Bid Document Requirements
Funds For Learning is often asked by applicants about the types of documents they should maintain to demonstrate compliance E-rate rules and regulations. Most applicants know to keep a copy of the Form 470, the RFP (if applicable), and the winning bid; but you should also keep copies of the losing bids, bid scoring criteria, and evaluation worksheets. In addition, you should keep any supplemental documentation that shows you conducted a fair and open competitive bidding process. Things like copies of correspondence between you and the service provider, call logs, and minutes from any meetings you had where the procurement was an item of discussion.
Some best practices to conducting a fair and open competitive bidding process include:
- If you are posting a Form 470 along with an RFP, it is best to release the RFP at the same time the Form 470 is posted.
- Also, if you have a required bid meeting related to an RFP, hold the meeting after the initial 28-day posting period has elapsed. Remember, that the 28 days is to allow potential service providers to become involved in the process.
- If you find yourself in a situation where you receive only one response to your Form 470, send yourself an e-mail to make that note.
- Also, any time that you want to keep an historical record of events, send yourself an e-mail. The date/time stamp from the message can be used to provide a great audit trail if there are questions about what happened at a given time.
With all of the hats that you wear within your organization—in addition to taking care of E-rate—keeping well organized documentation as you go is the best way to know that you are prepared in the event of an E-rate audit.