********************* ********************* ************** NOTICE ********************* ********************* ************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ********************* ********************* ********************* ** PUBLIC NOTICE FEDERAL COMMUNICATIONS COMMISSION 445 12TH STREET, S.W. WASHINGTON, D.C. 20554 DA 99-1859 News media information 202/418-0500 Fax-On-Demand 202/418-2830 Internet: http://www.fcc.gov ftp.fcc.gov Released: September 10, 1999 ACCOUNTING SAFEGUARDS DIVISION ISSUES FREQUENTLY ASKED QUESTIONS CONCERNING MID-SIZED ILECS' ARMIS AND COST ALLOCATION MANUAL OBLIGATIONS On June 30, 1999, the Commission released a Report and Order, CC Docket No. 98-81, that among other things reduced accounting requirements for mid-sized incumbent local exchange carriers (ILECs). The Commission's actions included: 1. Permitting mid-sized ILECs to use Class B accounting rather than Class A; 2. Permitting mid-sized ILECs to submit their cost allocation manuals (CAMs) based on the Class B accounting rather than Class A; 3. Permitting mid-sized ILECs to obtain an attest engagement every other year rather than an annual financial statement-type audit; and 4. Requiring all Part 32 carriers to consolidate accounts 2114, 2115, and 2116 into a new account 2114; consolidate accounts 6114, 6115, and 6116 into a new account 6114; eliminate account 5010; and record all nonregulated revenues in account 5280. We are issuing this Public Notice to help carriers understand their options and obligations under these new accounting rules. Below, we answer several questions carriers might ask about the new rules. We hope carriers will find these answers useful. 1. Must mid-sized ILECs obtain a CAM audit for 1999? No. The first two-year period for which mid-sized ILECs should obtain an attest engagement is for 1999-2000. The independent auditors of mid-sized ILECs may of course perform some audit procedures in 1999 because their opinions must cover both 1999 and 2000. 2. May mid-sized ILECs file their 1999 ARMIS data using Class B accounting? Yes. However, mid-sized ILECs also have the option to continue using Class A accounting for ARMIS. We will provide guidance for ARMIS reports at the Class A and Class B levels in our forthcoming annual ARMIS Order. 3. May mid-sized ILECs file their year-end 1999 CAMs using Class B accounting? Yes. Mid-sized ILECs may also elect to file their year-end 1999 CAMs using Class A accounting. 4. May Part 32 carriers consolidate accounts 2114, 2115, and 2116 into a new account 2114; consolidate accounts 6114, 6115, and 6116 into a new account 6114; eliminate account 5010; and record all nonregulated revenues in account 5280 before the year 2000? Yes. We will allow carriers to implement this rule change during 1999. ARMIS filing specifications will be provided based on the consolidation of these accounts. 5. Will the Division provide mid-sized ILECs with additional guidance for the attest engagements? Yes. The Division intends to work with the industry and its independent auditors in the upcoming months. At the end of this process, the Division intends to issue a Responsible Accounting Officer letter providing guidance on the performance of attest engagements required pursuant to Section 64.904(b) of our rules. Parties with further questions regarding compliance with the Report and Order should contact Tim Peterson at (202) 418-1575.