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 SEPARATE  STATEMENT  OF  COMMISSIONER  MICHAEL  J.  COPPS 
 Re:  Federal-  State  Joint  Conference  on  Accounting  Issues  (WC  Docket  No.  02-  269),  Recommendation 
 One  year  ago,  I  expressed  enthusiasm  when  the  Joint  Conference  on  Accounting  was  first  convened.  In  light  of  the  accounting  depredations  that  have  haunted  the 
 telecommunications  industry  and  the  economy  as  a  whole,  I  believed  then—  and  believe  now—  that  review  and  attention  from  both  state  and  federal  authorities  is  absolutely 
 essential. 
 Today,  the  Joint  Conference  offers  a  Recommendation  that  is  a  roadmap.  It  provides  the  Commission  with  a  set  of  directions  that  address  where  and  how  it  should 
 head  next  in  its  accounting  review.  The  Commission  now  must  move  swiftly  to  convert  this  Recommendation  into  a  Notice  of  Proposed  Rulemaking. 


 Through  participation  in  this  group,  it  has  become  clear  to  me  that  it  is  vitally  important  that  the  Commission  ensure  that  the  States  have  the  accounting  information 
 they  need  to  do  their  jobs.  Both  the  States  and  the  Commission  use  reported  data  to  develop  an  understanding  of  the  plant,  revenue  and  expenses  of  carriers  and  to  enable 
 comparisons  among  companies  and  over  time.  States  also  use  it  to  develop  prices  for  network  elements,  develop  prices  for  resold  services  and  conduct  ratemaking 
 proceedings.  In  short,  if  the  Commission’s  periodic  streamlining  efforts  strip  the  States  of  the  uniform  accounting  data  they  need,  they  will  be  unable  to  carry  out  their  statutory 
 responsibilities. 
 I  regret  that  this  fact  was  not  as  lucid  to  the  Commission  as  it  should  have  been  when  it  embarked  on  the  Phase  III  Further  Notice  of  Proposed  Rulemaking.  At  the  time, 
 the  Commission  suggested  that  we  should  only  collect  accounting  information  for  which  there  is  a  federal  purpose,  notwithstanding  any  state  need  for  the  data.  Yet  we  have 
 entered  an  era  when  more  information—  not  less—  is  necessary  to  ensure  that  consumers  are  confident  and  investors  secure.  We  have  a  duty  to  ensure  that  the  required  system  of 
 accounts  provides  both  state  and  federal  regulators  with  the  information  they  need  to  discharge  their  required  tasks. 


 To  this  end,  I  am  heartened  by  the  approach  taken  in  the  Joint  Conference  Recommendation.  The  Recommendation  specifically  rejects  the  federal  purpose  standard 
 and  approaches  its  review  under  the  broad  charge  of  the  Order  convening  the  Joint  Conference.  This  mandate  directs  the  Joint  Conference  to  evaluate  accounting 
 requirements  that  both  state  and  federal  regulators  need  and  to  further  the  development  of  improved  regulatory  accounting  and  related  requirements.  I  believe  the  approach  taken 
 in  the  Recommendation  is  the  right  way  to  go  and  the  right  thing  to  do. 
 Although  the  progress  we  make  today  is  good  news,  there  is  much  more  work  to  be  done.  This  Recommendation  addresses  only  a  narrow  subset  of  the  mandate.  We 
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 have  more  fundamental  challenges  ahead  as  we  work  to  live  up  to  our  charge  to  ensure  that  data  filed  by  carriers  are  adequate,  truthful  and  thorough. 
 I  believe  the  Joint  Conference  should  move  next  to  assess  broader  issues  that  impact  regulatory  accounting  and  reporting  reliability.  I  hope  we  can  start  by  rigorously 
 reviewing  the  scope  of  the  authority  granted  to  the  Commission  by  Congress.  In  particular,  I  would  like  the  Joint  Conference  to  consider  how  use  of  the  Commission’s 
 authority  to  inquire  into  the  business  management  of  carriers  under  Section  218  might  have  helped  us  to  identify  recent  corporate  governance  problems  ranging  from  capacity 
 swaps  to  tactics  to  circumvent  access  charges.  The  Commission  also  has  specific  requirements  that  carriers  must  comply  with  concerning  continuing  property  records.  I 
 hope  we  can  take  a  hard  look  at  how  the  Commission  can  undertake  regular  continuing  property  record  audits  to  ensure  that  carriers  maintain  equipment  in  compliance  with 
 Commission  rules  and  verify  that  property  is  recorded  in  proper  accounts.  Finally,  I  hope  the  Joint  Conference  can  serve  as  a  vehicle  for  jumpstarting  discussion  with  other 
 agencies  at  the  state  and  federal  level  with  interest  in  the  soundness  of  regulatory  accounting  and  reporting  requirements.  Such  discussion  could  help  inform  the 
 recommendations  of  the  Joint  Conference  to  the  Commission. 
 I  commend  my  state  and  federal  colleagues  on  the  Joint  Conference  for  their  extraordinary  effort.  I  commend  them  for  their  commitment  to  thinking  through  the 
 thorny  issues  of  our  accounts,  subaccounts,  separate  affiliate  rules  and  reporting  requirements.  This  group  tackled  issues  as  complex  as  they  come.  They  are  devoted  to 
 ensuring  we  craft  an  accounting  regime  that  will  best  serve  the  public  interest.  We  all  benefit  from  their  contributions  and  hard  work.  I  also  wish  to  commend  the  leadership  of 
 our  Chairman,  FCC  Commissioner  Martin.  Commissioner  Martin  has  encouraged  the  Joint  Conference  to  act  expeditiously  on  the  specific  accounting  rules  before  us  and  also 
 to  look  more  broadly  at  what  needs  to  be  done  so  that  our  accounting  rules  are  up  to  the  needs  and  the  high  standards  of  corporate  governance  that  the  American  people  have  a 
 right  to  expect  in  light  of  events  over  the  past  few  years. 
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