FCC Inspector General's Report on High Cost Fund

The Federal Communications Commission's Office of Inspector General concludes that the FCC's High Cost Program is "a risk" because the erroneous payment rate for the program is 23.3%. The IG's initial analysis of the second round of audits of the Universal Service Fund estimates that phone companies have been overpaid more than $970 million in subsidies to provide coverage in rural areas. An "erroneous payment" is defined by the Office of Management and Budget to be "any payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements." The OIG said the errors were not necessarily the result of fraud or corruption and may not be recoverable. Inadequate documentation and auditing processes, accounted for about half of the improper payments, while other reasons included weak internal controls, disregard of FCC rules, and inadequate monitoring or reporting systems. OIG found very few errors involved carriers being denied what they were owed, with overpayments amounting to 98.2% of all improper payments.