Sorenson Denies Barring FCC Auditors Access To Its Records
This story took an unusual turn late last night when a commenter, Sorenson Consumer Policy Board, left a response to the allegations raised by the Congressional Report in my blog. Since I feel it’s fair that the public also hears the other side on these serious accusations, I am publishing this comment in a new post where it will get adequate attention. However, my commentary on Sorenson’s previous unethical and illegal acts still stand. MZ
PS. Do read the first comment. A reader shared her POV of the situation. According to her, from reading the congressional report, Sorenson may have “prevented” the auditors when they showed up the first time unannounced. If so, that may explain the Congressional Report’s charges. MZ
J E N N E R & B L O C K
Jenner & Block LLP
1099 New York Avenue, NW
Suite 900
Washington, DC 20001-4412
Tel 202 639-6ooo
http://www.jenner.com
Michael B DeSanctis
Tel 202 637-6323
Fax 202 661-4828
mdesanctis@jenner com
Offices:
Chicago
New York
Washington, DC
June 24, 2008
VIA ELECTRONIC AND REGULAR MAIL
To: Mr. Curtis Hagan
Assistant Inspector General – Audits
Office of Inspector General
Federal Communications Commission
445 12th Street, SW, Room 2-C478
Washington, DC 20554
Re: TRS Audit
Dear Mr. Hagan:
The purpose of this letter is to record in writing the following facts: The Office of the Inspector General cancelled KPMG’s on-site visit to Sorenson’s corporate headquarters, which was set to begin June 16, 2008, even though Sorensen was ready, willing and able to accommodate that visit and make substantial data available to your auditors.
As Bill Garay will confirm, I personally inquired at least a dozen times over the last 15 months into when OIG planned to conduct the on-site portion of the audit. On May 27, 2008, Mr. Carnahan told me that he and his staff were ready to visit Sorenson’s offices to conduct the onsite portion of the audit of Sorenson’s recordation and reporting of VRS minutes. I had a telephonic conversation with Mr. Carnahan on June 3, 2008 in which I confirmed that Sorenson would be available and would welcome the KPMG audit staff beginning Monday, June 16, 2008.
We discussed what his team would need in terms of office space and equipment, and I assured him that we would provide him and KPMG with whatever they needed. We also discussed substantively that we would begin first thing Monday morning by having key employees walk his team through Sorenson’s processes and procedures for the recording and reporting of VRS minutes, and that his team would let us know how they wished to proceed from there. He asked Sorenson to reserve a full week, though he did not know whether KPMG would need all of that time.
Following up on my call with Mr. Carnahan, I sent a confirming letter to you on June 5, 2008, in which I stated “We remain committed to cooperating with OIG in the interests of having the audit completed in a timely manner. To that end, I am writing to confirm that Sorenson has agreed to host Terry Carnahan and his KPMG staff, commencing June 16, 2008, for the onsite component of the portion of the audit involving Sorenson’s systems and procedures for the recording and reporting of VRS minutes.”
In response, you informed me that you had decided to cancel the on-site visit. You asserted that you and Mr. Carnahan read my June 5 letter as not confirming our willingness to host the on-site audit. In fact, the letter states the exact opposite. Moreover, on June 12,1 told you that we still were ready, willing and able to host your audit commencing on June 16. Indeed, I called you that day from Salt Lake City, where I was involved in the preparations for KPMG’s visit. You made it clear at that time that KPMG would not visit on June 16, and that you were not interested in rescheduling for a later date.
During our June 12 call, you complained that in my June 5 letter I identified confidential data and information that should not be shared with the public or with other offices or bureaus within the Commission. However, I provided that information in writing to you because you had suggested that I do so in our earlier phone conversation on May 29, 2008. That suggestion was consistent with my previous conversation with David Hunt and Carla Conover, who informed me in an in-person meeting on May 14, 2008, that it is and always has been OIG’s policy to keep confidential all non-public information produced by TRS providers during the course of an audit and that such information would not be disclosed to the public or shared with other bureaus within the Commission. See Letter from M. DeSanctis to W. Garay, May 22, 2008.
Under these circumstances, the OIG bears complete and total responsibility for not undertaking the planned on-site minute audit. We did exactly as you had asked in identifying our confidential information and confirming that we would host the KPMG team beginning June 16. Moreover, over the past 15 months, we have now incurred substantial costs for an audit that you apparently no longer wish to hold. We remain willing, as always, to host the on-site minute audit and would be amendable to speaking with you about rescheduling.
Sincerely,
Michael B. DeSanctis
Counsel for Sorenson Communications, Inc.
cc: Kent Nilsson, Inspector General
This story took an unusual turn late last night when a commenter, Sorenson Consumer Policy Board, left a response to the allegations raised by the Congressional Report in my blog. Since I feel it’s fair that the public also hears the other side on these serious accusations, I am publishing this comment in a new post where it will get adequate attention. However, my commentary on Sorenson’s previous unethical and illegal acts still stand. MZ
PS. Do read the first comment. A reader shared her POV of the situation. According to her, from reading the congressional report, Sorenson may have “prevented” the auditors when they showed up the first time unannounced. If so, that may explain the Congressional Report’s charges. MZ
J E N N E R & B L O C K
Jenner & Block LLP
1099 New York Avenue, NW
Suite 900
Washington, DC 20001-4412
Tel 202 639-6ooo
http://www.jenner.com
Michael B DeSanctis
Tel 202 637-6323
Fax 202 661-4828
mdesanctis@jenner com
Offices:
Chicago
New York
Washington, DC
June 24, 2008
VIA ELECTRONIC AND REGULAR MAIL
To: Mr. Curtis Hagan
Assistant Inspector General – Audits
Office of Inspector General
Federal Communications Commission
445 12th Street, SW, Room 2-C478
Washington, DC 20554
Re: TRS Audit
Dear Mr. Hagan:
The purpose of this letter is to record in writing the following facts: The Office of the Inspector General cancelled KPMG’s on-site visit to Sorenson’s corporate headquarters, which was set to begin June 16, 2008, even though Sorensen was ready, willing and able to accommodate that visit and make substantial data available to your auditors.
As Bill Garay will confirm, I personally inquired at least a dozen times over the last 15 months into when OIG planned to conduct the on-site portion of the audit. On May 27, 2008, Mr. Carnahan told me that he and his staff were ready to visit Sorenson’s offices to conduct the onsite portion of the audit of Sorenson’s recordation and reporting of VRS minutes. I had a telephonic conversation with Mr. Carnahan on June 3, 2008 in which I confirmed that Sorenson would be available and would welcome the KPMG audit staff beginning Monday, June 16, 2008.
We discussed what his team would need in terms of office space and equipment, and I assured him that we would provide him and KPMG with whatever they needed. We also discussed substantively that we would begin first thing Monday morning by having key employees walk his team through Sorenson’s processes and procedures for the recording and reporting of VRS minutes, and that his team would let us know how they wished to proceed from there. He asked Sorenson to reserve a full week, though he did not know whether KPMG would need all of that time.
Following up on my call with Mr. Carnahan, I sent a confirming letter to you on June 5, 2008, in which I stated “We remain committed to cooperating with OIG in the interests of having the audit completed in a timely manner. To that end, I am writing to confirm that Sorenson has agreed to host Terry Carnahan and his KPMG staff, commencing June 16, 2008, for the onsite component of the portion of the audit involving Sorenson’s systems and procedures for the recording and reporting of VRS minutes.”
In response, you informed me that you had decided to cancel the on-site visit. You asserted that you and Mr. Carnahan read my June 5 letter as not confirming our willingness to host the on-site audit. In fact, the letter states the exact opposite. Moreover, on June 12,1 told you that we still were ready, willing and able to host your audit commencing on June 16. Indeed, I called you that day from Salt Lake City, where I was involved in the preparations for KPMG’s visit. You made it clear at that time that KPMG would not visit on June 16, and that you were not interested in rescheduling for a later date.
During our June 12 call, you complained that in my June 5 letter I identified confidential data and information that should not be shared with the public or with other offices or bureaus within the Commission. However, I provided that information in writing to you because you had suggested that I do so in our earlier phone conversation on May 29, 2008. That suggestion was consistent with my previous conversation with David Hunt and Carla Conover, who informed me in an in-person meeting on May 14, 2008, that it is and always has been OIG’s policy to keep confidential all non-public information produced by TRS providers during the course of an audit and that such information would not be disclosed to the public or shared with other bureaus within the Commission. See Letter from M. DeSanctis to W. Garay, May 22, 2008.
Under these circumstances, the OIG bears complete and total responsibility for not undertaking the planned on-site minute audit. We did exactly as you had asked in identifying our confidential information and confirming that we would host the KPMG team beginning June 16. Moreover, over the past 15 months, we have now incurred substantial costs for an audit that you apparently no longer wish to hold. We remain willing, as always, to host the on-site minute audit and would be amendable to speaking with you about rescheduling.
Sincerely,
Michael B. DeSanctis
Counsel for Sorenson Communications, Inc.
cc: Kent Nilsson, Inspector General
December 11th, 2008 at 12:19 pm
I also left the comment on Jamie Berke’s About.Com blog and I feel compelled to share my comment on your blog.
It is not the first time to read this comment, since it was posted at almost every blog available discussing about this matter.
Here’s my comment below:
I would like to respond to this commenter above, who identified as Sorenson Consumer Policy Board:
It is not the first time you posted this comment on this blog, you have posted exactly same comment to all kinds of blogs addressing to this issue. That is ’spamming’ and it is not appropriate.
According to your report, the auditors called and wanting to audit on May 27, 2008 and it appears to me that Sorenson was willing to accommodate with the auditors, and scheduled the visit in two weeks, instead of accommodating with these auditors immediately. Do you think these auditors wanted immediately without giving you two weeks in advance? That is highly possible.
Why two weeks? What is wrong of letting these auditors to come into your office and review the data available? Why scheduling for two weeks? That is little bit too suspicious.
I know that many companies do like to prepare for the visit, by preparing their offices, gathering data and documents, and presenting them before the auditors.
This letter was sent in June 24, 2008, after the initial call from OIG on May 27, 2008 wanting to audit.
It appears that both parties agreed on June 16th, that is two weeks from the first call. There were several phone calls confirming for the visit. Somehow it was cancelled by OIG.
Is there a reason why OIG cancelled the visit, because do they really want to see all kinds of data available that are unredacted?
According to the congressional report, it says:
“On April 10, 2008, KPMG reported to the FCC that Sorenson had denied the KPMG auditors access to the staff and systems necessary to conduct the audit, and refused to permit them to review the company’s unredacted financial statements for 2004, 2005, and 2006. KPMG was therefore unable to conduct the audit.”
That makes me wonder…
December 11th, 2008 at 12:28 pm
Amy, so they did refuse access the first time when the auditors came unannounced?
If so, this is suspicious.
Eventually we will find out the whole story.
The comment from last night was probably written with the assistance of Sorensen’s public relations department, with the intention of making Sorenson look good. It may leave out important details, like what you pointed out.
Thanks for sharing with us your perspective of this saga.
December 11th, 2008 at 12:33 pm
I cannot say that if they refuse access the first time. It is what it said on the commission report written by the audit company that Sorenson refused the access.
I know that Sorenson is being very cooperative and they want to show how cooperative they are to the public. This letter was written in June after the saga.
Usually the auditors did not like to be scheduled in the advance, and wanted to show up immediately to see what kind of documents available. Sometimes many companies do want to prepare themselves for the visit, by preparing the documents. It is very possible that they want some of the documents redacted (crossed off with black ink), and the auditors did not want that.
So it is a possible conflict of perspectives.
My question remains, if Sorenson have nothing to hide, they can easily accommodate the auditors.
Is it because the data is confidential? How so? Why is that? The auditors wanted to see how the funds been spent. Is that confidential? How is that be?
I am very curious about this, so the federal funds been used for VRS, and why is this become a proprietary data?
Is Sorenson a private company using FEDERAL dollars?
Thinking here..
Amy
December 11th, 2008 at 3:15 pm
Even if Sorenson Communications might or not have something to hide proper procedure must be used all times hence cancellations followed by making appointment through said proper procedure.
December 11th, 2008 at 5:32 pm
This is strictly my opinion based on my experiences of going through countless audits in the past.
Any companies that received Federal or State dollars must go through an annual audit by an outside CPA Firm that has no ties to the company.
Normally, the outside CPA firm that will perform the audit will a send a formal letter to the company stating when they will be coming and what documents that they would like to see prepare before they arrive on site. Once on site, they will review all the documents that was asked to be prepare before their arrival and then start doing “Sampling data testing” to ensure that what was reported actually happen.
Normally, audit firms do not show up unannounce to start the audit unless some sort of criminal investigation is going on then it is a different story. I am sure in this case that FCC did notified Sorenson that they need to go through an annual audit with an outside CPA firm. Sorenson does have the right to choose whatever CPA firm they want based on how much it would cost and what they have to offer to make sure its meet the audit requirement set by the FCC.
The only information that needs to be release to the public in this case is
How many VRS Minutes did they occurred during the period being audited?
How much revenue was received from FCC for providing VRS service?
What were the expenses relating to VRS servcies?
December 11th, 2008 at 5:52 pm
Thanks for sharing your experience, Steven.
Interesting that the company receiving state or federal funds must undergo an audit every year. From the Congressional Report, Sorenson hadn’t been audited for the years of 2004, 2005, and 2006.
December 12th, 2008 at 4:26 am
I was just wondering… why does everyone loves to pick on Sorenson Communications? Why not pick on HOVRS. HOVRS is a cheat, did u know that?
Let me explain… You know V-Meeting? Everyone (HOVRS) rep(s) are required to show up for meeting via HOVRS interpreter? um, something’s fishy.. they’re using that to collect money from FCC. Um? Sounds fishy… um.. HOVRS used to be to provided people who need to use the internet, HOVRS was paying them for the internet, did u know that? back in 2005. “Brown Bag” shame on HOVRS. I think FCC should start to look at HOVRS because theyre doing a dirty job..
By the way, You know “The Z” from CSDVRS.. it was so nice, yes but sadly, their warranty limited to 6 months, not a year!!! If the device isn’t working after 6 months, you have to PAY a new one! Sad!!! Same goes for hovrs! I am not sure about viable..
While Sorenson warranty just a for life-time!!!
Plus I have spoke one of my friend who works for Sorenson. He said if they’re not been audited then why DID FCC still give them money?!?!? that doesn’t make sense to me.. Everyone needs to chill out and not pick on Sorenson because they’re giving out a free damn videophone but ofc, i forget that as a deaf community always being whine ON everything!! I am not surprised, next they’ll whine on CSDVRS and HOVRS!!
December 12th, 2008 at 9:09 am
Here is interesting view of Soresnon. It is about staff who complain to congress.
This was posted on Ed’s alert – Take look at quote where it mentioned that FCC staff think deaf should pay for VRS service.
This might be reason for Sorenson to be on alert with audit company because of push by FCC staff.
Also Auditor company failed to show up to audit on June 16, 2008.
(Again post from ed’s alert)
Another Letter By Sorenson (16:53:41) :
Thursday, December 11, 2008, 12:14 am Eastern Time
SECOND UPDATED FLASH
Sorenson Responds to Allegations
Sorenson’s Press Release dated Dec. 9, 2008:
QUOTE:
Statement of Sorenson Communications, Inc.
On November 19, 2007, the five members of the Federal Communications Commission issued a unanimous decision to ensure that individuals who are deaf, hard-of-hearing or speech-impaired are able to participate fully in today’s connected society by obtaining the benefits of Telecommunications Relay Services (TRS). Unfortunately, the Majority Staff of the Committee on Energy and Commerce released a Report today that repeats the complaints of a disgruntled FCC employee who raised ill-founded questions about the unanimous decision of the FCC to support TRS.
Sorenson Communications and the other providers of TRS participated in an FCC proceeding that began in July 2006 and concluded in November 2007 con cerning compensation rates for all forms of TRS. Sorenson Communications and the other TRS providers submitted detailed information required by the FCC to the National Exchange Carriers Association (NECA), the administrator of the TRS fund, which included extensive data about historical costs and projected costs. The five members of the FCC relied on these submissions in their unanimous decision establishing new rate methodologies for all forms of TRS and establishing initial rates for each service.
Today’s Staff Report reprints excerpts of emails and memos from a discontented FCC staff person, whose views were rejected by the five members of the FCC. The Staff Report repeats the FCC staff person’s unsubstantiated, and ultimately discarded, assertions as if they were factual. The staffer’s quoted statements are factually inaccurate and ignore the voluminous filings of Sorenson and others, which do not support his conclusions. In fact, as the staffer’s emails reveal, he believes that the deaf should pay for video relay service (VRS); this view rejects the fundamental premise of the VRS program from the time the FCC authorized the service in 2000, that VRS consumers would be required to pay for the broadband service necessary for VRS but would not be charged for the video relay service. From the decision made unanimously by the FCC in November 2007, it is clear that the FCC Commissioners did not agree with the staffer’s characterization of the facts or with his c onclusions.
Sorenson Communications participated in the Inspector General/KPMG audit of TRS providers. While Sorenson expressed concern to the Inspector General and KPMG about the confidential treatment of financial information provided in the audit, and objected strenuously when the financial information of another provider was mistakenly published on the FCC’s website, Sorenson continued to participate in the audit. The KPMG auditors were expected at Sorenson’s headquarters on June 16, 2008 for the purpose of auditing the reporting system used by Sorenson for VRS minutes; Sorenson employees had prepared the information the auditors requested to review; and Sorenson employees were assembled ready to assist the auditors. As the attached letter describes, the KPMG auditors never arrived at Sorenson headquarters. Sorenson is proud of its system of reporting minutes of use of VRS to NECA and remains ready to cooperate with an audit.
December 12th, 2008 at 3:38 pm
HUH?, why are people picking on Sorenson? Maybe because they exhibit a pattern of unethical acts while controlling 82 percent of the market? Ya know that expression, when there is smoke, there is a fire somewhere.
Why don’t you ask Congress why they are picking on Sorenson? Perhaps the overpayment of 180 million dollars in two years Sorenson received is an excellent reason.
By the way, if you think something is amiss with the other VRS companies, perhaps you could contact FCC and share your concerns. It will be to the best interests of the Deaf Community to see less corruptions with all the VRS companies.
December 12th, 2008 at 9:42 pm
Deaf people have to be aware of more and more hearing people being resentful of the federal government’s subsidy of VRS calls with the American taxpayers.
The VRS calls are part of the government’s experiment on the future of visual communication which will not only benefit deaf people. That is my own assumption!
RLM