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SEC Fails To Police Own Finances
By Cliff Montgomery - Apr. 15th, 2012
The U.S. Government Accountability Office has “identified significant deficiencies in SEC’s internal control
over financial reporting,” according to a recent study. And as this report makes clear, it’s not the first time such
problems have been discovered.
All this means that the Securities and Exchange Commission (SEC)--the federal body charged with policing
corporate financial activities--cannot effectively police its own finances.
Below, The American Spark offers some telling quotes from the GAO report:
“On November 15, 2011, we issued our opinion on the U.S. Securities and Exchange Commission’s (SEC)...
fiscal years 2011 and 2010 financial statements.
“We also issued our opinion on the effectiveness of SEC’s internal controls over financial reporting as of
September 30, 2011, and our evaluation of SEC’s compliance with selected provisions of laws and regulations
during fiscal year 2011.
“In that report, we identified significant deficiencies in SEC’s internal control over financial reporting.
“The purpose of this report is to:
(1) present new recommendations related to the significant deficiencies we identified in our November
(2) communicate less significant internal control issues we identified during our fiscal year 2011 audit of
SEC’s internal controls and accounting procedures, along with our related recommended corrective
(3) summarize information on the status of the recommendations reported as open in our March 29,
2011, management report.
“In our audit of SEC’s fiscal years 2011 and 2010 financial statements, we identified four significant
deficiencies in internal control as of September 30, 2011. These significant internal control deficiencies
represent continuing deficiencies concerning controls over
(2) financial reporting and accounting processes,
(3) budgetary resources, and
(4) registrant deposits and filing fees.
“These significant control deficiencies may adversely affect the accuracy and completeness of information
used and reported by SEC’s management. We are making a total of 10 new recommendations to address
these continuing significant internal control deficiencies.
“We also identified other internal control issues that although not considered material weaknesses or
significant control deficiencies, nonetheless warrant SEC management’s attention.
These issues concern SEC’s controls over:
• implementation of post-judgment interest accounting procedures,
• accounting for disgorgement and penalty transactions, and
• the government purchase card program.
“We are making a total of 9 new recommendations related to these other internal control deficiencies.”
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