COLUMBIA--An audit of a fund created to help provide affordable phone service to all areas of the state says the program has largely accomplished its goal and doesn't need to continue in its current form.

The Legislative Audit Council report released Wednesday said the Universal Service Fund, which collected about $51 million for the fiscal year 2004-05, should be scaled back to supplements for low-income subscribers and support for telephone lines that companies can prove are overly expensive to operate.

A second similar program, called the Local Exchange Companies fund, should be phased out completely, according to the audit.

The Audit Council report also addressed the administration of the Universal Service Fund and found that the Public Service Commission failed to provide adequate checks on companies receiving money, failed to properly audit the fund and didn't have a computer system capable of administering the fund.

In its response to the audit, the Public Service Commission conceded that it had identified some of the same problems in its handling of the program and was taking steps to correct those.

"Many of the shortcomings in the administration of the (fund) identified by the (audit) occurred because the PSC did not have adequate resources and staff to administer the fund," agency chairman Randy Mitchell wrote to the Legislative Audit Council.

Mitchell said the agency is working with the new Office of Regulatory Staff, which has taken over some of the commission's duties, to administer the fund more efficiently.

However, Mitchell questioned whether the fund has accomplished its goal.

The audit said 93 percent of South Carolina households have telephone service, meaning the fund, in conjunction with a similar federal program, has provided the needed subsidy to help low-income residents pay for phone service.

But Mitchell pointed out the coverage is just 2 percentage points better than when the fund was created.

"Clearly, the General Assembly was at least concerned with the maintenance of affordable universal service as it was with the extension of basic telephone services to new households," Mitchell wrote in his response to the audit.

Mitchell said several of the audit's many recommendations would require legislative changes to implement.

State Sen. Jim Ritchie, R-Spartanburg, said the audit confirms what he and others thought: that most South Carolinians have access to affordable local phone service.