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ACE/RUS School and Symposium. Pro-forma Financial Requirement May 9, 2012. Shawn Arner Director, Southern Division RUS Telecom. P rogram [email protected] (202) 720-0800 Richard Anderson Operations Chief, Northern Div. RUS Telecom. Program [email protected]

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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. Program

ace rus school and symposium pro forma financial requirement
ACE/RUS School and SymposiumPro-forma Financial Requirement
  • Why collect pro-forma financials?
  • New format – not new requirement
  • What is required?
  • Common problems

2

ace rus school and symposium pro forma financial requirement1
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

ace rus school and symposium pro forma financial requirement2
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

ace rus school and symposium pro forma financial requirement3
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

ace rus school and symposium pro forma financial requirement4
ACE/RUS School and SymposiumPro-forma Financial Requirement
  • Common problems
    • Missing materials
    • Internal inconsistencies
    • Inadequate schedules or support

6

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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

ace rus school and symposium pro forma financial requirement6
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

ace rus school and symposium pro forma financial requirement7
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

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