Report No. CC-573          COMMON CARRIER ACTION               May 19, 1994


          COMMISSION RELEASES FEDERAL-STATE JOINT AUDIT REPORT ON
                 SOUTHWESTERN-BELL AFFILIATE TRANSACTIONS

     The Commission has released an audit report on the affiliate
transactions of Southwestern Bell Telephone Company (Southwestern). 
The audit report is the product of a federal-state joint audit team
comprised of Commission auditors and auditors from the regulatory
commissions of Arkansas, Kansas, Missouri, Oklahoma and Texas.  It
is the first time that a federal-state joint audit of a Regional
Bell Operating Company has involved Commission representatives as
well as representatives of all the states where the company offers
local exchange service.

     Chairman Reed Hundt said, "By combining auditing resources,
the FCC and the states both are able to enforce more effectively
the regulations essential to managing the transition to a
competitive telecommunications industry."

     The audit report presents the findings of the joint audit
team, and the Commission emphasizes that its decision to release
the report does not mean that the Commission has adopted the report
or endorses any of the analysis or conclusions contained in it. 
The Commission has directed the Common Carrier Bureau to review the
report promptly and prepare recommendations regarding possible
further action by the Commission within 90 days.

     In ordering public release, the Commission stated that it does
not routinely authorize release of audit reports prepared by
Commission staff.  In this case, the Commission found release is in
the public interest since it will inform the public about the joint
audit process and its inherent, substantial benefits, as well as
alerting interested persons, including customers, about the audit
team's findings.  The Commission noted that Southwestern has
submitted a statement that it makes no confidentiality or
proprietary claims for any of the information contained in the
audit report.




                                  (over)

     

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     Action by the Commission May 18, 1994, by Memorandum Opinion
and Order (FCC 94-114).  Chairman Hundt, Commissioners Quello and
Barrett.
                                   -FCC-

     News Media contact: Patricia A. Chew at (202) 632-5050.
     Common Carrier Bureau contact: Tom Beers and Helene T. Schrier
at (202) 632-7500.