§ 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]

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Subpart I—Review of Decisions Issued by the Administrator

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