Washington (July 3, 2003) -- An internal audit of the Securities and Exchange Commission revealed that the some portions of the regulator’s accounting standards was not up to par.

The audit, which was performed on the SEC’s fiscal 2002 financials was conducted by Alexandria, Va.-based Cotton & Co. under the auspices of the agency’s inspector general.

It revealed that the financial watchdog had incorrectly recorded employee salaries, benefit contributions and expenses in the wrong categories and that “inappropriate balances” were uncovered. The audit also found that the regulator had no accurate verification process to track the revenue fees it receives from stock exchanges, a levy which is based on the volume of transactions.

The SEC said it would spend roughly a half-million dollars to correct the audit problems.

-- WebCPA staff

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