§ 54.717   Audits of the Administrator.

   The Administrator shall obtain and pay for an annual audit conducted by
   an independent auditor to examine its operations and books of account
   to determine, among other things, whether the Administrator is properly
   administering the universal service support mechanisms to prevent
   fraud, waste, and abuse:

   (a) Before selecting an independent auditor, the Administrator shall
   submit preliminary audit requirements, including the proposed scope of
   the audit and the extent of compliance and substantive testing, to the
   Office of Managing Director.

   (b) The Office of Managing Director shall review the preliminary audit
   requirements to determine whether they are adequate to meet the audit
   objectives. The Office of Managing Director shall prescribe
   modifications that shall be incorporated into the final audit
   requirements.

   (c) After the audit requirements have been approved by the Office of
   Managing Director, the Administrator shall engage within thirty (30)
   calendar days an independent auditor to conduct the annual audit
   required by this paragraph. In making its selection, the Administrator
   shall not engage any independent auditor who has been involved in
   designing any of the accounting or reporting systems under review in
   the audit.

   (d) The independent auditor selected by the Administrator to conduct
   the annual audit shall be instructed by the Administrator to develop a
   detailed audit program based on the final audit requirements and shall
   be instructed by the Administrator to submit the audit program to the
   Office of Managing Director. The Office of Managing Director shall
   review the audit program and make modifications, as needed, that shall
   be incorporated into the final audit program. During the course of the
   audit, the Office of Managing Director may direct the Administrator to
   direct the independent auditor to take any actions necessary to ensure
   compliance with the audit requirements.

   (e) During the course of the audit, the Administrator shall instruct
   the independent auditor to:

   (1) Inform the Office of Managing Director of any revisions to the
   final audit program or to the scope of the audit;

   (2) Notify the Office of Managing Director of any meetings with the
   Administrator in which audit findings are discussed; and

   (3) Submit to the Chief of the Wireline Competition Bureau any
   accounting or rule interpretations necessary to complete the audit.

   (f) Within 105 calendar days after the end of the audit period, but
   prior to discussing the audit findings with the Administrator, the
   independent auditor shall be instructed by the Administrator to submit
   a draft of the audit report to the Office of Managing Director Audit
   Staff.

   (g) The Office of Managing Director shall review the audit findings and
   audit workpapers and offer its recommendations concerning the conduct
   of the audit or the audit findings to the independent auditor.
   Exceptions of the Office of Managing Director to the findings and
   conclusions of the independent auditor that remain unresolved shall be
   included in the final audit report.

   (h) Within fifteen (15) calendar days after receiving the Office of
   Managing Director's recommendations and making any revisions to the
   audit report, the Administrator shall instruct the independent auditor
   to submit the audit report to the Administrator for its response to the
   audit findings. At this time the auditor also must send copies of its
   audit findings to the Office of Managing Director. The Administrator
   shall provide the independent auditor time to perform additional audit
   work recommended by the Office of Managing Director.

   (i) Within thirty (30) calendar days after receiving the audit report,
   the Administrator shall respond to the audit findings and send copies
   of its response to the Office of Managing Director. The Administrator
   shall instruct the independent auditor that any reply that the
   independent auditor wishes to make to the Administrator's responses
   shall be sent to the Office of Managing Director as well as the
   Administrator. The Administrator's response and the independent
   auditor's replies shall be included in the final audit report;

   (j) Within ten (10) calendar days after receiving the response of the
   Administrator, the independent auditor shall file with the Commission
   the final audit report.

   (k) Based on the final audit report, the Managing Director may take any
   action necessary to ensure that the universal service support
   mechanisms operate in a manner consistent with the requirements of this
   part, as well as such other action as is deemed necessary and in the
   public interest.

   [ 67 FR 13227 , Mar. 21, 2002, as amended at  68 FR 18907 , Apr. 17, 2003;
    71 FR 38267 , July 6, 2006;  77 FR 71712 , Dec. 4, 2012]

   return arrow Back to Top

Subpart I--Review of Decisions Issued by the Administrator

   return arrow Back to Top