Telecommunications:

FCC Does Not Know if All Required Fees Are Collected

RCED-99-216: Published: Aug 31, 1999. Publicly Released: Oct 1, 1999.

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Pursuant to a congressional request, GAO provided information on the effectiveness of the Federal Communications Commission's (FCC) fee collection activities, focusing on: (1) FCC's controls for ensuring that required regulatory and application fees are paid; and (2) the extent to which FCC is collecting the civil monetary penalties resulting from its enforcement actions against entities that have violated its regulations.

GAO noted that: (1) FCC does not know if it is collecting all its required fees; (2) in the case of regulatory fees, FCC relies heavily on the telecommunications industry to comply voluntarily with its fee payment schedule because it does not have a system in place to ensure that all appropriate fees are being paid; (3) FCC does not have sufficient information to: (a) identify all the entities that should pay regulatory fees; and (b) determine whether these entities have paid the full amounts required; (4) in addition, FCC's fee collection database is not linked to its licensing databases, making it difficult for FCC to perform routine automated checks on whether all licensees have paid their regulatory fees; (5) nevertheless, FCC has the capability to undertake substantive oversight efforts using the information it does have; (6) in 1998, it used available information to check on regulatory fee collection for radio stations, identifying over 800 stations that did not pay required fees and collecting nearly $600,000 in past-due fees and late payment penalties; (7) however, this type of special effort is not routinely done by FCC bureaus; (8) regarding application fees, GAO's examination of a random sample of applications processed by five FCC bureaus found that four of the bureaus did not have adequate documentation that fees were paid in many cases; (9) FCC's Office of Inspector General also has evaluated FCC's fee collection database and reported that FCC could not provide supporting documentation for almost half of the transactions selected for review; (10) both FCC's Office of Managing Director and Office of Inspector General have initiatives under way aimed at improving the fee collection processes; (11) these actions are in early stages, however; (12) FCC reported to the Department of the Treasury that, at the end of fiscal year 1998, it had an uncollected balance of about $15 million in civil monetary penalties; (13) GAO found that the FCC's reports to the Treasury contain errors and are therefore not reliable; (14) as a result, GAO cannot reach any conclusions about the effectiveness of FCC's collection of civil monetary penalties; (15) data problems aside, FCC officials maintain that it is difficult to predict how much of the outstanding balance of proposed or assessed penalties ultimately will be collected because most of the penalties listed in the Treasury report are not yet legally enforceable debts; and (16) on the basis of experience from prior years, these officials estimate that about 75 percent of the outstanding proposed or assessed penalties will remain uncollected.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: FCC has developed an agency-wide business plan which calls on all FCC Bureaus to use available information to ensure the collection of all applicable fees. The plan includes specific goals for collecting additional fees from entities that have not previously paid or paid the wrong amount.

    Recommendation: To better ensure that FCC collects appropriate regulatory and application fees and accurately tracks the status of civil monetary penalty assessments and collections, the Chairman, FCC, should direct FCC's Managing Director and Bureau Chiefs to develop and implement a business plan and procedures for routinely using the information available to FCC to identify, to the extent possible, entities that have not paid required regulatory fees and to collect the amounts they owe. This plan should include specific performance goals and measures consistent with the requirements of the Government Performance and Results Act.

    Agency Affected: Federal Communications Commission

  2. Status: Closed - Implemented

    Comments: All FCC bureaus and offices have developed and implemented written procedures detailing the steps they take to verify that an application fee is paid prior to authorization of the application. These procedures have been compiled by FCC's Managing Director and provided to FCC's Office of Inspector General.

    Recommendation: To better ensure that FCC collects appropriate regulatory and application fees and accurately tracks the status of civil monetary penalty assessments and collections, the Chairman, FCC, should direct FCC's Managing Director and Bureau Chiefs to develop and implement written procedures adequate to ensure that the required application fee has been paid before an application is approved.

    Agency Affected: Federal Communications Commission

  3. Status: Closed - Implemented

    Comments: FCC hired an outside auditor, Ernst & Young (E&Y), to examine its civil monetary penalty data. According to its February 2001 report, E&Y examined a judgmental sample of 37 penalties. Of the $7.3 million assessed in those cases, $7.1 million was properly recorded in FCC's system. E&Y made several recommendations to further improve the accuracy of FCC's data.

    Recommendation: To better ensure that FCC collects appropriate regulatory and application fees and accurately tracks the status of civil monetary penalty assessments and collections, the Chairman, FCC, should direct FCC's Managing Director and Bureau Chiefs to conduct an audit of FCC's data on the status of civil monetary penalties to correct any data errors and internal control weaknesses that may have led to errors before incorporating these data into FCC's planned new financial system.

    Agency Affected: Federal Communications Commission

 

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