The Securities and Exchange Commission is working to remedy internal control deficiencies related to accounting and financial reporting processes, the agency’s chairman, Christopher Cox, has said in response to a GAO report calling for improvements.
GAO identified areas for improvement in SEC internal controls based on a review of audits of the agency’s fiscal 2007 and 2006 financial statements and after analyzing the controls.
It found deficiencies with the period-end financial reporting process, disgorgements and penalties, accounts receivable, accounting for transaction fee revenues, and preparing financial statement disclosures.
GAO also identified internal control deficiencies including deficiencies in the design or operation of internal controls relating to information security controls, property and equipment, and accounting for budgetary resources.
In response to the report, Cox said the SEC was committed to remedying the internal control deficiencies this year.
“The deficiencies in internal control over financial reporting are attributable to ineffective compensating controls over the manual processes and spreadsheets supporting financial statement balances that, in the desired state, will be replaced by fully automated integration,” Cox wrote in comments.
In the near term, Cox said the agency would, for example, develop and improve process documentation, overlay manual processes with additional compensating controls, and implement standard general ledger compliant posting models.
He also said that in fiscal 2008 the agency would ensure process and procedural documentation is also in place, while eliminating manual data handling and the use of multiple labor-intensive spreadsheets by automating the generation of financial statements.