e-Rate audits are increasingly becoming a fact of life for e-Rate applicants. The Federal Communications Commission (FCC) has been allowed to spend more and more money to examine applicants to ensure they are compliant with e-Rate rules and regulations. The key to surviving an e-Rate audit is to always be prepared for one by maintaining proper documentation about your e-Rate activities.

If you do receive notification that you are to undergo an audit, the quality and detail of the documentation of your e-Rate activities will be the primary factor in determining if you are in compliance with program rules. It's important to keep in mind that being the subject of an audit does not mean that you are suspected of wrongdoing. Audits are just one of the many ways the FCC and the Universal Service Administrative Co. (USAC) are making sure that e-Rate dollars are being committed and used properly. 

Five-year documentation rules

A fundamental e-Rate rule requires that you maintain all of the documents associated with a funding commitment for a period of five years from the last date of service. That means you'll have a lot of documents covering many years of services at any one time. The list of documentation related to a funding commitment is too long to list here, but it covers everything from the technology plan upon which your request is based to copies of bank statements showing that you deposited reimbursement checks from your service provider.

For the list of key documents commonly requested during an e-Rate audit, see the "e-Rate Binder" available from USAC's web site.

Prepare for audits as you go

Here are two questions to ask yourself continually as you go about the business of procuring services, requesting and using e-Rate funding, and maintaining documents:

1. Am I doing anything that is in violation of my local rules or e-Rate rules?

Applicants know they must follow all applicable local rules and e-Rate regulations--but it's a good idea to ask yourself this question on a regular basis. During the course of an audit, if your organization is found to be in violation of local or e-Rate rules, it might be required to pay money it received in e-Rate discounts back to the program. This also could result in additional scrutiny in future years to ensure you've appropriately addressed the problems that were found.

2. Do I have the necessary documentation to prove I'm in compliance with e-Rate rules and regulations?

This goes beyond just retaining copies of your e-Rate forms, bid evaluations, and discount calculation documents. It also should include any additional information that demonstrates your compliance with e-Rate rules. Because an audit can cover anything that has happened in the last five years, don't just rely on your memory to recall the specifics of a certain situation. Save copies of e-Rate-related eMail messages, and keep a file of notes and any other documentation that shows you followed both your local rules and e-Rate rules.