[Federal Register: July 6, 2006 (Volume 71, Number 129)]
[Rules and Regulations]
[Page 38266-38267]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06jy06-7]
=======================================================================
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 54
[FCC 06-89]
Amend the Commission's Rules To Align Oversight of the Universal
Service Fund (USF)
AGENCY: Federal Communications Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: In this document, we amend our rules to align oversight of the
Universal Service Fund (USF) with the responsibilities of the Office of
the Inspector General (OIG) and the Office of the Managing Director
(OMD). Specifically, we assign certain audit activities formerly
assigned to the Wireline Competition Bureau (WCB), including oversight
of the annual part 54 audit of the Universal Service Administrative
Corporation (USAC), to the OIG and assign calculation of the quarterly
USF contribution factor to OMD. The Commission has in place a number of
mechanisms to oversee the USF and its current Administrator, USAC. In
this document, we shift responsibility for two of these mechanisms, the
annual audit of USAC and calculation of the USF contribution factor, to
the OIG and OMD, respectively. These changes better align these USF
oversight functions with the divisions within the Commission that can
execute them most effectively.
[[Page 38267]]
DATES: Effective August 7, 2006.
FOR FURTHER INFORMATION CONTACT: Mika Savir, Office of the Managing
Director at (202) 418-0384.
SUPPLEMENTARY INFORMATION:
Adopted: June 20, 2006; Released: June 23, 2006
By the Commission:
1. By this Order, we amend our rules to align oversight of the
Universal Service Fund (``USF'') with the responsibilities of the
Office of the Inspector General (``OIG'') and the Office of the
Managing Director (``OMD''). Specifically, we assign certain audit
activities formerly assigned to the Wireline Competition Bureau
(``WCB''), including oversight of the annual part 54 audit of the
Universal Service Administrative Corporation (``USAC''), to the OIG and
assign calculation of the quarterly USF contribution factor to OMD.
2. The Commission has in place a number of mechanisms to oversee
the USF and its current Administrator, USAC. In this Order, we shift
responsibility for two of these mechanisms, the annual audit of USAC
and calculation of the USF contribution factor, to the OIG and OMD,
respectively. These changes better align these USF oversight functions
with the divisions within the Commission that can execute them most
effectively.
3. First, we amend Sec. 54.717 of our rules to give the OIG
oversight of the annual USAC audit. Section 54.717 of the Commission's
rules requires USAC ``to 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 [USAC] is properly
administering the universal service support mechanisms to prevent
fraud, waste, and abuse.'' \1\ Under the Commission's part 54 rules,
the Wireline Competition Bureau (``WCB'') has been the staff unit
responsible for overseeing the conduct of the audit. The purpose of
this annual audit has been to oversee the operations of the USF
Administrator and to safeguard the USF from potential waste, fraud, and
abuse. Because a principle purpose of this audit is to deter waste,
fraud, and abuse, we amend the Commission's rules to delegate oversight
authority to the OIG. This amendment is consistent with the OIG's
responsibility to conduct audits of Commission programs \2\ and detect
and prevent fraud and abuse.\3\ As an essential part of this
responsibility, we also amend the audit requirements applicable to the
part 54 audit of USAC to allow the OIG to determine the type of audit
to examine USAC's administration. The Commission's decision adopting
the part 54 independent audit requirement specified an agreed upon
procedures (``AUP'') form of audit.\4\ Although the codified Commission
rules do not specify the type of audit, the order establishing the
annual independent audit requires the use of an ``agreed-upon
procedures'' engagement.\5\ We recognize that the OIG may conclude that
other types of audits would better assist in carrying out its mission
to detect potential waste, fraud, and abuse in the USF. We therefore
clarify that, going-forward, the OIG may use whatever type of audit it
concludes would be better suited to evaluating USAC and its operations.
We also clarify that the OIG may require the use of government auditing
standards for these audits.\6\
---------------------------------------------------------------------------
\1\ 47 CFR 54.717.
\2\ 47 CFR 0.13(a).
\3\ 47 CFR 0.13(c).
\4\ USAC Order, 12 FCC Rcd at 18440, paragraph 76. In an agreed-
upon procedures attestation engagement, the auditors perform testing
to issue a report of findings based on specific procedures performed
on subject matter. See ``Government Auditing Standards,'' section
6.02(c), GAO-03-673G, June 2003.
\5\ See 47 CFR 54.717(a)-(k).
\6\ See Application of Generally Accepted Accounting Principles
for Federal Agencies and Generally Accepted Government Auditing
Standards to the Universal Service Fund, Order, 18 FCC Rcd 19911,
paragraph 5 (GovGAAP Order) (requiring the use of government
auditing standards for audits of USF beneficiaries and
contributors); see also General Accounting Office, Government
Auditing Standards: 2003 Revision, GAO-03-673G (June 2003) (``GAGAS
Handbook'') (specifying government auditing standards). We note that
government auditing standards incorporate the auditing standards of
the American Institute of Certified Public Accountants (AICPA). Id.
at 6.01, 6.05.
---------------------------------------------------------------------------
4. Finally, we revise section 54.709 of our rules to require USAC
to submit to the OMD projections of demand for USF support mechanisms,
projections of revenue, projections of administrative expenses, and the
contribution base. Contributions to the universal service support
mechanisms are determined using a quarterly contribution factor
calculated by the Commission.\7\ We now revise our internal processes
to require the OMD, instead of the Wireline Competition Bureau, to
calculate the contribution factor and release the public notices
pertaining to the contribution factor, consistent with the OMD's
general responsibility over the Commission's financial matters.\8\ We
are therefore revising Sec. 54.709(a)(3) to require USAC to submit the
above information to the OMD.
---------------------------------------------------------------------------
\7\ 47 CFR 54.709(a). We release a public notice quarterly, see,
e.g., ``Proposed First Quarter 2006 Universal Service Contribution
Factor,'' CC Docket No. 96-45, Public Notice, 20 FCC Rcd 19933
(2005).
\8\ 47 CFR 0.11(a)(8).
---------------------------------------------------------------------------
5. The rule amendments adopted in this Order involve rules of
agency organization, procedure, or practice. The notice and comment and
effective date provisions of the Administrative Procedure Act are
therefore inapplicable.\9\
---------------------------------------------------------------------------
\9\ 5 U.S.C. 553(b)(3)(A).
---------------------------------------------------------------------------
6. Accordingly, it is ordered, that pursuant to sections 4(i),
4(j), 5(c), 303(r), 47 U.S.C. 154(i), 154(j), 155(c), 303(r) of the
Communications Act of 1934, as amended, 47 CFR part 54 is amended, as
set forth below, effective August 7, 2006.
Federal Communications Commission.
William F. Caton,
Deputy Secretary.
Final Rule
0
For the reasons discussed in the preamble, the Federal Communications
Commission amends 47 CFR part 54 as follows:
PART 54--UNIVERSAL SERVICE
0
1. The authority citation for part 54 continues to read as follows:
Authority: 47 U.S.C. 1, 4(i), 201, 205, 214, and 254 unless
otherwise noted.
Sec. 54.709 [Amended]
0
2. In 47 CFR 54.709 (a)(3) remove the words ``Wireline Competition
Bureau'' and add in their place, the words ``Office of the Managing
Director'' each place it appears.
Sec. 54.717 [Amended]
0
3. In 47 CFR 54.717 (a), (b), (c), (d), (e)(1), (e)(2), (f), (g), (h)
and (i) remove the words ``Wireline Competition Bureau'' and add in
their place, the words ``Office of Inspector General'' each place it
appears and in paragraph (k) remove the words ``Chief of the Wireline
Competition Bureau'' and add in their place, the words ``Inspector
General''.
[FR Doc. E6-10481 Filed 7-5-06; 8:45 am]
BILLING CODE 6712-01-P