The Government Accountability Office (GAO) recently published a report detailing the complexities of the E-rate program. In the report, the GAO found that USAC needs to create better internal controls and that FCC should conduct a “robust risk assessment” of the overall design structure of the E-rate program. The report assessed the application review process, invoicing review process, and audit process, as well as the methods USAC uses to determine product eligibility.
Findings from the report include:
- USAC’s funding year 2009 PIA Form 471 Review Procedures manual contains approximately 700 pages of detailed instructions and flowcharts for Solix PIA reviewers to follow in addressing the various parts of the Form 471.
- To verify that an applicant is eligible for the program, the manual directs the PIA reviewer through a potential 39-step process.
- The GAO believes the PIA process has been expanded by USAC because USAC has not conducted a detailed risk assessment regarding their procedures.
- USAC maintains a list of approved services and equipment that are eligible for E-rate discounts. This list is based on broader guidance that USAC posts annually for applicants. It has grown from approximately 6,000 to 8,000 eligible items—about a 32 percent increase from funding years 2006 through 2009.
- The GAO found that the FCC and USAC do not have documented and approved policies and procedures for the beneficiary audit process.
- Although the FCC and USAC use the results of beneficiary audits to identify and report beneficiary noncompliance, they have not effectively used the information gained from audits to assess and modify the E-rate program’s internal controls.
- GAO found that the beneficiary audit process did not result in the timely resolution of audit findings and approval of audit reports. For example, the average time between USAC receipt of a draft audit report and the USAC board’s Schools & Libraries Committee approval of the final report was approximately 224 days.
- Of the 655 beneficiaries that were audited from 2006 through February 2010, 64 were audited more than once. Of those 64 beneficiaries, 36 had repeat audit findings of the same program rule violation.
