§ 54.420   Low income program audits.

   (a) Independent audit requirements for eligible telecommunications carriers.
   Companies that receive $5 million or more annually in the aggregate, on a
   holding company basis, in Lifeline reimbursements must obtain a third party
   biennial audit of their compliance with the rules in this subpart. Such
   engagements shall be agreed upon performance attestations to assess the
   company's overall compliance with rules and the company's internal controls
   regarding these regulatory requirements.

   (1) For purposes of the $5 million threshold, a holding company consists of
   operating companies and affiliates, as that term is defined in section 3(2)
   of  the  Communications  Act  of  1934,  as amended, that are eligible
   telecommunications carriers.

   (2) The initial audit must be completed one year after the Commission issues
   a standardized audit plan outlining the scope of the engagement and the
   extent of compliance testing to be performed by third-party auditors and
   shall be conducted every two years thereafter, unless directed otherwise by
   the Commission. The following minimum requirements shall apply:

   (i) The audit must be conducted by a licensed certified public accounting
   firm that is independent of the carrier.

   (ii) The engagement shall be conducted consistent with government accounting
   standards (GAGAS).

   (3) The certified public accounting firm shall submit to the Commission any
   rule interpretations necessary to complete the biennial audit, and the
   Administrator  shall  notify  all  firms subject to the biennial audit
   requirement of such requests. The audit issue will be noted, but not held as
   a negative finding, in future audit reports for all carriers subject to this
   requirement unless and until guidance has been provided by the Commission.

   (4)  Within  60  days after completion of the audit work, but prior to
   finalization of the report, the third party auditor shall submit a draft of
   the audit report to the Commission and the Administrator, who shall be
   deemed authorized users of such reports. Finalized audit reports must be
   provided to the Commission, the Administrator, and relevant states and
   Tribal governments within 30 days of the issuance of the final audit report.
   The reports will not be considered or deemed confidential.

   (5) Delegated authority. The Wireline Competition Bureau and the Office of
   Managing  Director  have  delegated authority to perform the functions
   specified in paragraphs (a)(2) and (a)(3) of this section.

   (b) Audit requirements for new eligible telecommunications carriers. After a
   company is designated for the first time in any state or territory the
   Administrator will audit that new eligible telecommunications carrier to
   assess  its  overall compliance with the rules in this subpart and the
   company's internal controls regarding these regulatory requirements. This
   audit  should be conducted within the carrier's first twelve months of
   seeking federal low-income Universal Service Fund support.

   [ 77 FR 12974 , Mar. 2, 2012, as amended at  77 FR 38534 , June 28, 2012]

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