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ACE/RUS School and Symposium

ACE/RUS School and Symposium. Pro-forma Financial Requirement May 9, 2012. Shawn Arner Director, Southern Division RUS Telecom. P rogram shawn.arner@wdc.usda.gov (202) 720-0800 Richard Anderson Operations Chief, Northern Div. RUS Telecom. Program richard.anderson@wdc.usda.gov

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ACE/RUS School and Symposium

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  1. ACE/RUS School and Symposium Pro-forma Financial Requirement May 9, 2012 Shawn Arner Director, Southern Division RUS Telecom. Program • shawn.arner@wdc.usda.gov • (202) 720-0800 • Richard Anderson • Operations Chief, Northern Div. • RUS Telecom. Program • richard.anderson@wdc.usda.gov • (202) 720-0733

  2. ACE/RUS School and SymposiumPro-forma Financial Requirement • Why collect pro-forma financials? • New format – not new requirement • What is required? • Common problems 2

  3. ACE/RUS School and SymposiumPro-forma Financial Requirement • Why collect pro-forma financials? • FCC USF & ICC Reform Order and FNPRM of 11/18/11 rendered old toll calculation method obsolete • Completes transition begun for non-op. and non-reg. net income and op. expenses • Makes financial data required more like Broadband application 3

  4. ACE/RUS School and SymposiumPro-forma Financial Requirement • New format – not new requirement • 7 CFR 1751.51(a) requires a finding of feasibility and security for the loan based on self-liquidation, economic feasibility, growth in equity, and other factors determined to be relevant by the Administrator • 7 CFR 1737.22(b) states that an application should contain 3 years of certified financial statements, toll settlement statements and related data, and any other supporting data required by the Administrator 4

  5. ACE/RUS School and SymposiumPro-forma Financial Requirement • What is required? • 4 years’ Operating Reports + 3 years’ audits • Pro-forma balance sheet, income statement, and statement of cash flows (paper and electronic) • Supporting schedules, including Network Access Revenues ,Schedule S (paper and electronic) • Assumptions and reasons for each line item, plus a narrative and certification for Schedule S 5

  6. ACE/RUS School and SymposiumPro-forma Financial Requirement • Common problems • Missing materials • Internal inconsistencies • Inadequate schedules or support 6

  7. ACE/RUS School and SymposiumPro-forma Financial Requirement 4.a. Missing materials • Not all parts provided (lacking schedules) • No certification provided (Schedule S-a or b) • No assumptions or reasons provided • Explanation not provided for every line item • Pro-formas not in required format • Electronic format not provided 7

  8. ACE/RUS School and SymposiumPro-forma Financial Requirement 4.b. Internal inconsistencies • Pro-formas do not match Operating Reports • Schedules do not agree with one another 8

  9. ACE/RUS School and SymposiumPro-forma Financial Requirement 4.c. Inadequate schedules or support • Assumptions and reasons problems • Insufficient explanation of assumptions • Need to explain the “how and why” projections were derived • Insufficient Detail and Explanations of Network Access Revenues (schedule S) • Need to break into components such has HCLS, ICLS, LSS, as appropriate. • Need to tie in exactly how the projections were calculated – cannot be generic • Cash Flow shows negative cash balance – no explanation 9

  10. Pro-forma Financial Requirement ACE/RUS School and Symposium QUESTIONS? 10

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