Preparing the Audit

1. Preparing the Audit

2. Preparing For An Audit Types of audits Preparing for the audit Record keeping

3. Why Me! Random Audits Selected Audits The greater the amount of the funding request, the higher the chance of an audit Once you have been audited, the greater the chance of subsequent audits in following years

4. Who Does Audits USAC Internal Audit USAC External Auditors FCC/OIG Bearing Point Justice Department

5. How To Prepare For The Audit Follow All E-rate Rules Document, Document, Document!

6. 5th Order Documentation Requirements The order requires program participants to retain all documents necessary to demonstrate compliance with the statute and Commission rules regarding the application for, receipt, and delivery of services receiving schools and libraries discounts. The descriptive list in the order is a guideline, but cannot be considered exhaustive. Documentation must be retained for 5 years after the last date services are delivered.

7. Preparing For The AuditBidding Overview of the selection process including criteria and weighting of the criteria RFPs issued Copies of all bids received (winning and losing) Contracts for supported services Copy of procurement policy and procedure

8. Preparing For The AuditBidding - Continued Bid evaluation documentation including evaluation worksheets List of all vendors supplying E-rate services including contact information If applicable, copies of state and local procurement regulations and procedures Any available documentation that indicates that all bids were considered

9. Preparing For The AuditInvoicing Detailed procedure for validating and processing vendor bills and submitting invoices to SLD (if applicable) Documentation verifying date of receipt of equipment Copies of invoices (BEAR Forms) for supported services Reconciliation by FRN of vendor bills to invoices submitted to SLD

10. Preparing For The AuditInvoicing Documentation of any SPIN change request including copy of notice to original service provider Documentation of payment (canceled checks) of payment for E-rate services to vendors Documentation or receipt and deposit of any amounts received for BEAR invoices

11. Preparing For The AuditCIPA Copy of the Internet safety policy Documentation of the adoption of the Internet safety policy The date and a copy of the minutes of the public hearing regarding the Internet safety policy [Local Board adopted policy] Copies of Forms 479 and/or Forms 486, if applicable

12. Preparing For The AuditServices Copy of the technology plan(s) and approval letter(s) covering the complete year under review Summary of the technology environment and a high-level network diagram Any other documentation on the services (such as training and workstations) necessary to make effective use of E-rate discounts List of E-rate equipment including references to vendor invoice, SLD invoice, serial number, and current physical location

13. Preparing For The AuditOther Copy of the Eligible Services List (Applicable Funding Year) Reports of any other audits conducted that relate to either E-rate program or the NSLP. Copies of financial statements and annual budgets Documentation and supporting worksheets for the discount calculation

14. Preparing For The AuditOther - Continued Description of the E-rate team including, staff, vendors, and consultants. This should contain their roles and responsibilities. Any correspondence from or to USAC, the FCC, potential E-rate vendors, or any E-rate team member For consortia, letters of agency

15. Who Should Be Available Person who filed the E-rate forms Person who managed the bidding and award process Person who reviews and approves invoices Person who prepares E-rate invoices Person who writes checks, makes deposits, and reconciles the bank account Person knowledgeable about the network and the location of equipment

16. How To Avoid Audit IssuesBidding Retain copies of RFPs, all bids received (both winning and losing), and all contracts. Maintain documentation of compliance with state and local procurement regulations, including advertising and bonding. Maintain documentation of the process and any related analyses leading to the selection of the winning bid. Sign contracts ONLY after the 28-day posting requirement.

17. How To Avoid Audit IssuesBidding - Continued A service provider is permitted to supply general advice to an applicant in preparing Form 470, BUT CANNOT SIGN OR PREPARE THE FORM 470. Maintain documentation indicating the details of the advice supplied in order to protect both the applicant and service provider from any appearance of impropriety.

18. How To Avoid Audit IssuesInvoicing Customer bills should have been received for any BEAR invoice (Form 472) submitted to SLD. Submit invoices to SLD only after services have been delivered and — for BEAR Forms — the applicant’s payment has been remitted to the service provider. The submitter of an invoice should maintain an analysis relating the SLD invoice (BEAR Form or SPI Form) to the invoice numbers of the customer bill.

19. How To Avoid Audit IssuesInvoicing - Continued Maintain copies of customer bills and invoices submitted to SLD to facilitate any requested reconciliation. Maintain documentation of compliance with Copan certifications for SPIN changes.

20. How To Avoid Audit IssuesInvoicing If 45 days have passed since the receipt of the BEAR Notification Letter without receipt of payment from the service provider, contact the service provider and request payment. If payment is not forthcoming, contact the SLD invoice hotline at 1-973-428-7335 to request assistance. Establish controls to track specific payments of the non-discount portion of services provided to invoices submitted to SLD.

21. How To Avoid Audit IssuesInvoicing Include only services provided within the funding year on invoices submitted to SLD. Submit requests for extensions for service delivery or invoicing on a timely basis. Always verify extensions by referring to the status on the “FRN Extension Table” available on the SLD web site. Refund the appropriate portion of disbursements made by SLD for equipment that is returned.

22. How To Avoid Audit IssuesServices Maintain an inventory of E-rate equipment that includes make, model, serial number, physical location, date installed, FRN, customer bill reference number(s), pre-discount cost, non-discount portion, and reference number (e.g., check number) of the payment of the non-discount portion Test the network on a periodic basis to confirm that it is functioning and maintain documentation of the results.

23. How To Avoid Audit IssuesServices Be sure that services are not requested or ultimately used for ineligible purposes, i.e., other than education purposes. NOTE: Form 471 requires applicants to certify that they have secured access to the resources necessary to make effective use of E-rate discounts. This means the ability to pay the non-discount share and to acquire any other equipment or services necessary to make use of connectivity, including those services not supported by E-rate discounts, such as workstations and telephone handsets.

24. How To Avoid Audit IssuesServices Document the delivery and installation of equipment using a completion certificate. Maintain completion certificates in a permanent file. Submit service substitution requests on a timely basis and maintain copies of requests and approvals.

25. How To Avoid Audit IssuesTechnology Plan Retain a copy of the budget. Retain a copy of the technology plan approval letter. Make sure the approved plan covers the complete funding year and includes the 5 criteria.

26. How To Avoid Audit IssuesTechnology Plan - Continued The technology plan requires an evaluation process to monitor progress toward the specified goals and objectives. Retain documentation that the monitoring process has been implemented as defined in the approved technology plan.

27. How To Avoid Audit IssuesEntities The definition of a school is governed by state law. Juvenile justice, adult education, and/or pre-kindergarten students and/or facilities may or may not be eligible for E-rate support depending on state law.

28. How To Avoid Audit IssuesEntities - Continued All entities receiving services should be listed in the Form 471 Block 3 worksheet(s). After receiving the Receipt Acknowledgment Letter (RAL), verify that all the Block 3 data are correct by reviewing the display copy of Form 471 on the SLD web site. Report any errors within the three-week RAL correction period.

29. How To Avoid Audit IssuesDiscount Percentage Retain documentation that supports the discount percent requested on Form 471. This documentation includes, but is not limited to, the free and reduced lunch report or other documentation. If an alternative discount method was used, retain documentation that agrees with the student eligibility information on the Form 471 Block 3 worksheets.

30. Observations From Recent Bearing Point Visits Applicants are not aware of or have not contacted their State E-rate Coordinators Applicants are not aware that they should label their E-rate funded equipment An inventory or asset register did not exist Applicants do not receive Quarterly Disbursement Report and would like to specify where to receive the report Applicants are unaware of the availability of Universal Service training materials and resources

31. Observations From RecentBearing Point Visits Applicants are unaware of the FCC five year document retention requirement Applicants do not maintain a record keeping system Applicants do not use a tracking system for invoices and bills Applicants are unaware that there is a Universal Service Hotline

32. Observations From Recent Bearing Point Visits Applicants are unaware of the ease on online filing Applicants could not describe the competitive bidding process Applicants are unaware of their discount level Applicants did not have an understanding of the repercussions for falsely certifying application forms

33. QUESTIONS?