Surviving an E-rate Audit

The Technology Information Center for Administrative Leadership (TICAL) has a great article on their site written by Tim Landeck which outlines some very practical advice for surviving an E-rate audit. Mr. Landeck is the Director, Technology Services for Pajaro Valley Unified School District. We are posting the article here with their permission.

Surviving an E-rate Audit
Tim Landeck
Director, Technology Services
Pajaro Valley Unified School District

We received the dreaded email, fax and letter (yes, all three formats) identifying our school district as the next to receive the intense, two to six week visit from KPMG, the contracted auditors for the E-rate program. I can't imagine anyone who would be excited about this visit no matter how well prepared they are. However, careful record keeping, document collecting, and concise presenting will help make the process easier, faster, and more effective for all involved.

The following are a few things to keep in mind when preparing for or responding to an E-rate audit.

1. Understand that the KPMG auditors are not the enemy. They are contracted individuals who have a job to complete and your challenge is to make it as easy and transparent as possible. If you have been careful to track your documentation and to keep all transactions clean then you have nothing to worry about and should open up your documentation as needed.
2. Respond quickly and completely. You are generally given a basic timeline to respond to the auditors queries and it is suggested that you respond as soon as possible, but don't fail to respond within the time frame you are given. The auditors are often able to adjust their timelines a bit to meet specific requirements of your district, but cannot make adjustments if they do not hear from you. Note that the auditors considered our district's winter break as part of the timeframe to respond to their requests, even though my department and I were not scheduled to be at work for over two weeks. As it turned out, requesting that winter break not be counted in the timeline to respond to their audit inquiries was non-negotiable.
3. Utilize the technology to support your E-rate audit response. We utilized a Microsoft SharePoint server to store, index, search, and organize our documentation which saved us time and helped to produce a streamlined set of documents for the auditors. You are provided with an organizational template of specific requests and we organized our documents digitally in that exact format. We then temporarily placed the documents on a web site for the auditors to download. This provided them with digital documents that they were able to search and quickly locate pieces of information embedded deep in what would otherwise have been reams of paper, which helped to save us printing and postage costs.
4. Four can equal two. Our auditors anticipated spending four to six weeks onsite during the audit. They were auditing many of our Funding Request Numbers (FRNs) from a single year period which represented extensive hardware and services that were installed in the schools. Due in large part to our presentation of the documentation, they left our district after two weeks of investigation (three to four weeks early!). I had been told by other Technology Directors to keep the auditors busy because if they run out of things to do they will go looking for other items, but my experience was the exact opposite. Once they had all the information they were looking for, they were more than happy to leave sunny California.
5. Be honest and forthcoming with information. If they sense that you are hiding anything, then they have authorization to dig further and look harder, even if it is not directly pertaining to the identified FRNs to be audited. Again, if you have kept good documentation and you are on the up and up with E-rate processes, do whatever you need to do to get them the information they are requesting.
6. Clear your calendar during the auditor's onsite scheduled visit. You should anticipate many questions throughout the day from the auditors when they are on site and your timely responses will help move the audit along. If you are busy in meetings and high priority projects, then both your regular work and the E-rate audit will suffer. Plan accordingly and let your colleagues know of your anticipated lack of availability during the auditors visit.
7. Keep ALL documentation. People submitting the E-rate applications click checkboxes acknowledging that detailed documentation will be kept, don't forget to do just that. We have been asked for items (i.e. meeting minutes) where E-rate was a topic of discussion, even staff meetings (I might provide this expert opinion piece during my next E-rate audit as an item where E-rate was mentioned!).

E-rate is a great program that has brought a tremendous amount of funding for school district infrastructure and services and launched many school districts into the 21st century. However there is no free lunch and along with that funding comes some strings such as compliance audits which can be very intensive and detailed. According to Funds for Learning, the more you apply for in E-rate funding on an annual basis, the greater your chances of receiving an E-rate audit. And if you apply for over a million dollars worth of funding in a year's time, you have an 80% chance of being audited so be ready to dazzle the auditors with your meticulous record keeping and organization, but start preparing now, not when you receive the fax, email, or letter!