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GAO-12-424R 1 (2012-04-13)

handle is hein.gao/gaobacfyl0001 and id is 1 raw text is: Accountabiliy - Integrity - Reliability United States Government Accountability Office Washington, DC 20548 April 13, 2012 The Honorable Mary L. Schapiro Chairman U.S. Securities and Exchange Commission Subject: Management Report: Improvements Needed in SEC's Internal Controls and Accounting Procedures Dear Ms. Schapiro: On November 15, 2011, we issued our opinion on the U.S. Securities and Exchange Commission's (SEC) and its Investor Protection Fund's (IPF)1 fiscal years 2011 and 2010 financial statements. We also issued our opinion on the effectiveness of SEC's internal controls over financial reporting as of September 30, 2011, and our evaluation of SEC's compliance with selected provisions of laws and regulations during fiscal year 201 1.2 In that report, we identified significant deficiencies in SEC's internal control over financial reporting. The purpose of this report is to (1) present new recommendations related to the significant deficiencies we identified in our November 2011 report;3 (2) communicate less significant internal control issues we identified during our fiscal year 2011 audit of SEC's internal controls and accounting procedures, along with our related recommended corrective actions; and (3) summarize information on the status of the recommendations reported as open in our March 29, 2011, management report4 (see enc. I). 1IPF was established in 2010 to fund the activities of SEC's whistleblower award program and the SEC Office of Inspector General suggestion program for SEC employees. See Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, § 922, 124 Stat. 1376, 1841 (July 21, 2010) (codified at 15 U.S.C. § 78u-6). IPF is a separate fund within SEC and its financial statements present a segment of SEC financial activity. Accordingly, IPF's financial transactions are also included in SEC's financial statements. However, the significant deficiencies discussed in this report pertain to SEC's financial reporting but not that of IPF because of the nature of IPF's financial transactions during fiscal year 2011. 2GAO, Financial Audit: Securities and Exchange Commission's Financial Statements for Fiscal Years 2011 and 2010, GAO-12-219 (Washington, D.C.: Nov. 15, 2011). 3See enc. I for the list of open recommendations relating to continuing control deficiencies that contributed to the significant deficiencies over financial reporting discussed in our opinion report, GAO-12-219. 4GAO, Management Report: Improvements Needed in SEC's Internal Controls and Accounting Procedures, GAO-11-348R (Washington, D.C.: Mar. 29, 2011). GAO-12-424R SEC Management Report

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