In an exchange of correspondence, where the irony couldn't have been not lost on any of the authors, the Government Accountability Office offered 14 recommendations to improve the internal controls of the Securities and Exchange Commission.
The suggestions are specifically pointed to addressing weaknesses within the SEC's accounting and financial reporting procedures -- the same functions the SEC regulates for public company investors.
The GAO issued its report on the SEC's financial statements for both the 2004 and 2005 fiscal years last November, and also addressed the agency's internal controls as of Sept. 30. That report concluded that many of the material weaknesses at the SEC had carried over from the statements for the 2004 fiscal year. In January, t he GAO said that the SEC had addressed 13 of its original 34 recommendations as of January.
SEC Chairman Christopher Cox said that the agency had taken additional steps since then. "I remain committed to enhancing the SEC's financial and operational effectiveness so that the agency can lead by example," Cox said in a written response included in the GAO report.
Among the GAO's most recent recommendations:
- People with the knowledge, skills and experience to achieve effective implementation of internal control over the reporting process should staff the Office of Financial Management;
- Formal, written policies and procedures governing financial reporting processes and related internal control and quality assurance should be formalized;
- A senior management council or committee should oversee financial reporting activities, provide advice and regularly review the agency's financial information, operations and policies;
- Cut-off dates for significant account balances that are both appropriate and practical to facilitate interim financial reporting and meeting year-end financial reporting deadlines should be determined; and,
- Interim footnote disclosures to facilitate meeting year-end financial reporting deadlines should be prepared.
The GAO's full report is available at www.gao.gov/new.items/d06459r.pdf.
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