The Universal Service Administrative Company August 16 provided a summary of what it said were its outside auditors' observations after conducting 41 beneficiary audits of the E-rate program's first three years. The audits were started by the national accounting firm of Arthur Andersen before the firm's role in reviewing the financial records of Enron Corp. became public.
USAC noted that it had completed its review of the audits of 1998 activities and was currently reviewing and validating the auditors' observations for the 1999 and 2000 funding years. Once its response is complete, it said, it would be forwarded to the Federal Communications Commission. USAC said it was providing the summary at this time "in response to applicant and service provider requests" to give program participants "an idea of issues being raised by the audits."
USAC said the auditors had raised a variety of questions over issues involving competitive bidding, the eligibility of entities, whether services were provided during the funding year, incomplete invoice documentation, payments, equipment and services, technology plans, compliance with state and local procurement rules, and other issues indicating that poor controls were in place.
Among the 41 beneficiaries, the auditors found these issues were most prevalent:
- Customer bill did not support the requested reimbursement amount (16 instances);
- The undiscounted portion of services provided was not paid (13 instances);
- Evidence could not be provided of compliance with competitive bidding requirements (11 instances);
- Services were not provided during the applicable funding year (11 instances);
- Copies of contracts could not be provided upon request (8 instances); and
- Customer bill contained insufficient detail to determine service eligibility (7 instances).
USAC said when its review was completed it would publish its observations and suggest "best practices" to address the auditors' concerns. The USAC announcement can be reviewed at http://www.sl.universalservice.org/reference/BeneficiaryAudits.asp.