The Securities and Exchange Commission has weaknesses in its internal controls, according to a report by the Government Accountability Office.

The GAO audited the SEC’s financial statements for fiscal years 2006 and 2007. While it found the financials to be fairly presented, the GAO said the SEC did not have effective internal control over its financial reporting as of Sept. 30, 2007.

Last year, the GAO reported on weaknesses in the SEC’s reporting of disgorgements and penalties, information system controls, and property and equipment controls. The SEC has made some improvements since then, but the GAO noted that many processes were still manual and prone to error.

The GAO also found problems with the controls over the SEC’s period-end closing process, accounting for transaction fee revenue, and preparation of financial statement disclosures in 2006. Other problems occurred in the controls over property and equipment, and in the SEC’s accounting for budgetary transactions.

The GAO plans to offer recommendations for corrective action in a separate report.

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