You'd think the SEC would get the house in order after TARP - GAO says NO chance!

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posted on Nov, 16 2009 @ 05:05 PM
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This report from the GAO is quite mind blowing for me.

How can an organisation fail so miserably at its' job. You'd think that if anything, the credit crunch, bail out and global recession should have been a wake up call to get the books, processes, policies and systems in order!


FINANCIAL AUDIT


Securities and Exchange Commission’s Financial Statements for Fiscal Years 2009 and 2008


In GAO’s opinion, SEC’s fiscal years 2009 and 2008 financial statements are fairly presented in all material respects. However, in GAO’s opinion, SEC did not have effective internal control over financial reporting as of September 30, 2009. Recommendations for corrective action will be included in a separate report.

During this year’s audit, we identified six significant deficiencies that collectively represent a material weakness in SEC’s internal control over financial reporting. The significant deficiencies involve SEC’s internal control over (1) information security, (2) financial reporting process, (3) fund balance with Treasury, (4) registrant deposits, (5) budgetary resources, and (6) risk assessment and monitoring processes. These internal control weaknesses give rise to significant management challenges that have reduced assurance that data processed by SEC’s information systems are reliable and appropriately protected; impaired management’s ability to prepare its financial statements without extensive compensating manual procedures; and resulted in unsupported entries and errors in the general ledger.

These deficiencies are likely to continue to exist until SEC’s general ledger system is either significantly enhanced or replaced, key accounting activity is fully integrated with the general ledger at the transaction level, information security controls are strengthened, and appropriate resources are dedicated to maintaining effective internal controls. In the interim, SEC will need to place greater emphasis on monitoring the current risks and vulnerabilities, along with the related compensating procedures, to determine whether these risks are being adequately mitigated on an ongoing basis. Successfully addressing these issues is critical to maintaining SEC’s credibility given its important role in the financial reporting process of registrants, and is vital to achieving SEC’s stated vision to be the standard against which federal agencies are measured.


Lets look at those:

(1) information security
(2) financial reporting process
(3) fund balance with Treasury
(4) registrant deposits
(5) budgetary resources
(6) risk assessment and monitoring processes.

I mean, c'mon, the SEC must have a mandate to carry out a thousand tasks, but these 6 would be pretty high up the scale of "importance".

Number 6 is paramount, especially in the wake of the bailout.

I guess we we well and truly had the wool pulled over our eyes on this one!



[edit on 16-11-2009 by kiwifoot]






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