FCC Imposes New Document Retention Rules and Penalties
Message Posted October 3, 2004
(Note: This is the fourth and final summary relating to the FCC's Fifth
Order.)
Applicants have long been required to certify in Form 471 and 472 that they
will retain worksheets and records supporting their applications for five
years. This “requirement,” however, has just now being expanded and
codified as a formal program rule. This has several important implications.
1) The required retention period is defined as five years from the last day
of service (e.g., June 30, 2005 for recurring FY 2004 services). This
corresponds to the new “administrative limitations period” in which the FCC
or USAC can determine that a violation has occurred and can seek the
recovery of funds.
2) By making this a rule, rather than simply a procedural requirement,
violations will hence forth subject an applicant to a commitment adjustment
(“COMAD”). If during an audit, an applicant cannot properly document any
required aspect of a funded service, USAC may demand the repayment of
associated funds.
3) Record retention requirements apply to both applicants and service
providers.
4) Prior to this Order, there have been recommendations, but little formal
guidance, on the types of records which should be retained. Although the
new Order does not specify a full and explicit list of documents, it does
provide a rather detailed “illustrative” list that should serve as a strong
warning to applicants and service providers alike. In only slightly
condensed form, the list reads as follows:
* “Pre-bidding Process. Beneficiaries must retain the technology plan and
technology plan approval letter. If consultants are involved, beneficiaries
must retain signed copies of all written agreements with E-rate consultants.
* “Bidding Process. All documents used during the competitive bidding
process must be retained. Beneficiaries must retain documents such as:
Request(s) for Proposal (RFP(s)) including evidence of the publication date;
documents describing the bid evaluation criteria and weighting, as well as
the bid evaluation worksheets; all written correspondence between the
beneficiary and prospective bidders regarding the products and service
sought; all bids submitted, winning and losing; and documents related to the
selection of service provider(s). Service providers must retain any of the
relevant documents described above; in particular, a copy of the winning bid
submitted to the applicant and any correspondence with the applicant.
Service providers participating in the bidding process that do not win the
bid need not retain any documents.
* “Contracts. Both beneficiaries and service providers must retain
executed contracts, signed and dated by both parties. All amendments and
addendums to the contracts must be retained, as well as other agreements
relating to E-rate between the beneficiary and service provider, such as
up-front payment arrangements.
* "Application Process. The beneficiary must retain all documents relied
upon to submit the Form 471, including National School Lunch Program
eligibility documentation supporting the discount percentage sought;
documents to support the necessary resources certification pursuant to
section…of the Commission’s rules, including budgets; and documents used to
prepare the Item 21 description of services attachment.
* “Purchase and Delivery of Services. Beneficiaries and service providers
should retain all documents related to the purchase and delivery of E-rate
eligible services and equipment. Beneficiaries must retain purchase
requisitions, purchase orders, packing slips, delivery and installation
records showing where equipment was delivered and installed or where
services were provided. Service providers must retain all applicable
documents listed above.
* “Invoicing. Both service providers and beneficiaries must retain all
invoices. Beneficiaries must retain records proving payment of the
invoice, such as accounts payable records, service provider statement,
beneficiary check, bank statement or ACH transaction record. Beneficiaries
must also be able to show proof of service provider payment to the
beneficiary of the BEAR, if applicable. Service providers must retain
similar records showing invoice payment by beneficiary to the service
provider, USAC payment to the service provider, payment of the BEAR to the
beneficiary, through receipt or deposit records, bank statements,
beneficiary check or automated clearing house (ACH) transaction record, as
applicable.
* “Inventory. Beneficiaries must retain asset and inventory records of
equipment purchased and components of supported internal connections
services sufficient to verify the location of such equipment. Beneficiaries
must also retain detailed records documenting any transfer of equipment
within three years after purchase and the reasons for such a transfer.
* “Forms and Rule Compliance. All program forms, attachments and documents
submitted to USAC must be retained. Beneficiaries and service providers
must retain all official notification letters from USAC, as applicable.
Beneficiaries must retain FCC Form 470 [and] FCC Form 471 and certification
pages (if not certified electronically), FCC Form 471 Item 21 attachments,
FCC Form 479, FCC Form 486, FCC Form 500, FCC Form 472. Beneficiaries must
also retain any documents submitted to USAC during program integrity
assurance (PIA) review, Selective Review and Invoicing Review, or for SPIN
change or other requests. Service providers must retain FCC Form 473, FCC
Form 474 and FCC Form 498, as well as service check documents. In addition,
beneficiaries must retain documents to provide compliance with other program
rules, such as records relevant to show compliance with CIPA.”
I will be reviewing these new documentation requirements at the E-rate
Training Workshops that are being held at the end of October and beginning
of November. Please register as soon as possible if you haven't done so
already.
-- Julie
Julie Tritt Schell
jtschell@comcast.net
(717) 730.7133 (voice)
(717) 730.9060 (fax)
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