SEC Year 2000 Report:
Future Reports Could Provide More Detailed Information
GGD/AIMD-98-51, Mar 6, 1998
Pursuant to a congressional request, GAO reviewed the Securities and Exchange Commission's (SEC) report on the status of its efforts to ensure that its computer systems, as well as those used by participants in the securities industry, are ready for the date changeover in the year 2000, focusing on: (1) SEC's June 1997 report on the status of year 2000 compliance by SEC, the securities industry, and public companies to identify any ways that future reports might be improved; (2) the adequacy of SEC's oversight of the year 2000 remediation efforts directed at its internal systems, self-regulatory organizations (SRO), broker-dealers, and other regulated entities; and (3) the guidance SEC has provided to public companies for disclosing year 2000 remediation efforts.
GAO noted that: (1) SEC's first report in June 1997 provided an overview of the efforts that SEC and various industry participants had made to address year 2000 issues, but did not contain the specific, detailed information that Congress will need to assess progress as the year 2000 approaches; (2) according to an agency official, SEC had collected more detailed information from some market participants, such as SROs; (3) the official said that SEC did not include this information in the report because SEC had been focused on assessing the extent to which market participants were aware of the year 2000 problem and had begun taking steps to address it; (4) the Office of Management and Budget's (OMB) reporting format offers guidance on the type of detailed information SEC might provide Congress in future reports; (5) such information includes: (a) the systems considered critical to the continued functioning of the U.S. securities markets; (b) the progress made in moving these systems through the various phases of achieving year 2000 compliance; (c) the timeframes required to complete each phase; (d) the efforts necessary to address systems that are behind schedule; and (e) the contingency plans for systems that may not be ready in time; and (6) also, as the year 2000 approaches and less time to make adjustments is available, SEC's yearly progress updates may be too infrequent for congressional needs.
- Review Pending
- Closed - implemented
- Closed - not implemented
Recommendation for Executive Action
Recommendation: The Chairman, SEC, should include in its year 2000 status reports to Congress information similar to that required of other federal agencies by OMB. Specifically, SEC reports should include information on: (1) the systems critical to the continued functioning of the U.S. securities markets; (2) the progress made in moving critical systems through the various phases of achieving year 2000 compliance; (3) the timeframes required to complete each phase of the process; (4) the contingency plans for systems that may not be ready in time; and (5) the efforts necessary to address systems that are behind schedule. SEC should also report such information more frequently, such as quarterly update briefings, to keep Congress informed as the year 2000 approaches.
Agency Affected: United States Securities and Exchange Commission
Status: Closed - Implemented
Comments: In its second yearly report to Congress, SEC presented information on the status of the year 2000 readiness of the critical computer systems used by exchanges and clearing organizations. The information for these organizations was presented in detail that showed what percentage of systems had progressed through the various phases of year 2000 remediation. Information on the status of securities firms, investment companies, and transfer agents was also shown that depicted how many were in various phases. The report also included discussions of actions SEC would be taking to ensure that those that fall behind schedule improve and contained more detailed discussions of contingency planning efforts under way. SEC is also providing quarterly briefings to congressional staff to supplement the reports it is submitting annually.