Sec.  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 Wireline
   Competition Bureau.

   (b) The Wireline Competition Bureau shall review the preliminary audit
   requirements to determine whether they are adequate to meet the audit
   objectives. The Wireline Competition Bureau shall prescribe modifications
   that shall be incorporated into the final audit requirements.

   (c) After the audit requirements have been approved by the Wireline
   Competition Bureau, 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 Wireline Competition
   Bureau. The Wireline Competition Bureau 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 Wireline Competition
   Bureau 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 Wireline Competition Bureau of any revisions to the final
   audit program or to the scope of the audit;

   (2) Notify the Wireline Competition Bureau 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 Wireline Competition Bureau Audit Staff.

   (g) The Wireline Competition Bureau 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
   Wireline Competition Bureau 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 Wireline
   Competition Bureau'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 Wireline Competition Bureau. The Administrator shall provide
   the independent auditor time to perform additional audit work recommended by
   the Wireline Competition Bureau.

   (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 Wireline Competition Bureau. 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
   Wireline Competition Bureau 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 Chief of the Wireline Competition
   Bureau 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]

Subpart I—Review of Decisions Issued by the Administrator