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Preparing the AuditPreparing the Audit

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Preparing For An AuditPreparing For An Audit

Types of audits Preparing for the auditRecord keeping

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Why Me!Why Me!

Random AuditsSelected AuditsThe greater the amount of the funding request, the higher the chance of an auditOnce you have been audited, the greater the chance of subsequent audits in following years

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Who Does AuditsWho Does Audits

USAC Internal AuditUSAC External AuditorsFCC/OIGBearing PointJustice Department

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How To Prepare For The AuditHow To Prepare For The Audit

Follow All E-rate Rules

Document, Document, Document!

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55thth Order Documentation Requirements 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.

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Preparing For The AuditPreparing For The AuditBiddingBidding

Overview of the selection process including criteria and weighting of the criteriaRFPs issued Copies of all bids received (winning and losing) Contracts for supported services Copy of procurement policy and procedure

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Preparing For The AuditPreparing For The AuditBidding - ContinuedBidding - 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

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Preparing For The AuditPreparing For The AuditInvoicingInvoicing

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 servicesReconciliation by FRN of vendor bills to invoices submitted to SLD

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Preparing For The AuditPreparing For The AuditInvoicingInvoicing

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 vendorsDocumentation or receipt and deposit of any amounts received for BEAR invoices

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Preparing For The AuditPreparing For The AuditCIPACIPA

Copy of the Internet safety policyDocumentation of the adoption of the Internet safety policyThe 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

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Preparing For The AuditPreparing For The AuditServicesServices

•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

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Preparing For The AuditPreparing For The AuditOtherOther

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 budgetsDocumentation and supporting worksheets for the discount calculation

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Preparing For The AuditPreparing For The AuditOther - ContinuedOther - 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 memberFor consortia, letters of agency

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Who Should Be AvailableWho Should Be Available

Person who filed the E-rate formsPerson who managed the bidding and award processPerson who reviews and approves invoicesPerson who prepares E-rate invoicesPerson who writes checks, makes deposits, and reconciles the bank accountPerson knowledgeable about the network and the location of equipment

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How To Avoid Audit IssuesHow To Avoid Audit IssuesBiddingBidding

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.

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How To Avoid Audit IssuesHow To Avoid Audit IssuesBidding - ContinuedBidding - 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.

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How To Avoid Audit IssuesHow To Avoid Audit IssuesInvoicingInvoicing

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.

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How To Avoid Audit IssuesHow To Avoid Audit IssuesInvoicing - ContinuedInvoicing - 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.

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How To Avoid Audit IssuesHow To Avoid Audit IssuesInvoicingInvoicing

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.

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How To Avoid Audit IssuesHow To Avoid Audit IssuesInvoicingInvoicing

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.

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How To Avoid Audit IssuesHow To Avoid Audit IssuesServicesServices

•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.

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How To Avoid Audit IssuesHow To Avoid Audit IssuesServicesServices

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.

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How To Avoid Audit IssuesHow To Avoid Audit IssuesServicesServices

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.

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How To Avoid Audit IssuesHow To Avoid Audit IssuesTechnology PlanTechnology 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.

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How To Avoid Audit IssuesHow To Avoid Audit IssuesTechnology Plan - ContinuedTechnology 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.

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How To Avoid Audit IssuesHow To Avoid Audit IssuesEntitiesEntities

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.

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How To Avoid Audit IssuesHow To Avoid Audit IssuesEntities - ContinuedEntities - 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.

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How To Avoid Audit IssuesHow To Avoid Audit IssuesDiscount PercentageDiscount 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.

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Observations From Recent Observations From Recent Bearing Point VisitsBearing Point Visits

Applicants are not aware of or have not contacted their State E-rate CoordinatorsApplicants are not aware that they should label their E-rate funded equipmentAn inventory or asset register did not existApplicants do not receive Quarterly Disbursement Report and would like to specify where to receive the reportApplicants are unaware of the availability of Universal Service training materials and resources

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Observations From RecentObservations From RecentBearing Point VisitsBearing 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

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Observations From Recent Observations From Recent Bearing Point VisitsBearing 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

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QUESTIONS?QUESTIONS?