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    Subject Term: "Financial regulation"

    8 publications with a total of 30 open recommendations including 1 priority recommendation
    Director: Lawrance Evans, Jr.
    Phone: (202) 512-8678

    6 open recommendations
    Recommendation: Congress should consider whether additional changes to the financial regulatory structure are needed to reduce or better manage fragmentation and overlap in the oversight of financial institutions and activities to improve (1) the efficiency and effectiveness of oversight; (2) the consistency of consumer and investor protections; and (3) the consistency of financial oversight for similar institutions, products, risks, and services. For example, Congress could consider consolidating the number of federal agencies involved in overseeing the safety and soundness of depository institutions, combining the entities involved in overseeing the securities and derivatives markets, transferring the remaining prudential regulators' consumer protection authorities over large depository institutions to the Consumer Financial Protection Bureau, and the optimal role for the federal government in insurance regulation, among other considerations.

    Agency: Congress
    Status: Open

    Comments: One bill has been introduced in the 115th Congress that would change the financial regulatory structure to address fragmented and overlapping regulatory authorities among agencies, as GAO suggested in February 2016. H.R. 594 was introduced on January 20, 2017, and calls for the functions of the Commodity Futures Trading Commission and the Securities and Exchange Commission to be combined in a single independent regulatory commission. Such an action could help to address fragmentation and overlap between the two agencies, and reduce opportunities for inefficiencies in the regulatory process and inconsistencies in how regulators conduct oversight activities over similar types of institutions, products, and risks.
    Recommendation: Congress should consider whether legislative changes are necessary to align FSOC's authorities with its mission to respond to systemic risks. Congress could do so by making changes to FSOC's mission, its authorities, or both, or to the missions and authorities of one or more of the FSOC member agencies to support a stronger link between the responsibility and capacity to respond to systemic risks. In doing so, Congress could solicit information from FSOC on the effective scope of its collective designation authorities, including any gaps.

    Agency: Congress
    Status: Open

    Comments: No legislative action identified. As of March 1, 2017, no legislation had been introduced that would align FSOC's authorities with its mission to respond to systemic risks, as GAO suggested in February 2016. Without such legislative changes, FSOC may lack the tools it needs to comprehensively address systemic risks that may emerge, and a gap will continue to exist in the post Dodd-Frank Wall Street Reform and Consumer Protection Act mechanisms for the mitigation of systemic risks.
    Recommendation: To help regulators address regulatory fragmentation and improve FSOC's ability to identify emerging systemic risks, as OFR develops and refines its financial stability monitoring tools, it should work with FSOC to determine ways in which to fully and regularly incorporate current and future monitors and assessments into Systemic Risk Committee deliberations, including, where relevant, those that present disaggregated or otherwise confidential supervisory information.

    Agency: Department of the Treasury: Financial Stability Oversight Council: Office of Financial Research
    Status: Open

    Comments: At the FSOC Systemic Risk Committee meeting held in December 2016, Treasury indicated that Office of Financial Research staff presented on the agency's Financial Stability Report. Officials indicated that they provided an assessment on potential financial stability risks, including macroeconomic, market, credit, funding and liquidity, and contagion risks. Systemic Risk Committee meeting attendees were able to compare and contrast these with the results from the Federal Reserve's systemic risk monitoring activities, which were also presented at the meeting. Office of Financial Research officials stated that there was general consensus at the meeting that these discussions were useful and that they should continue. GAO does not believe that this action is consistent with the intent of if February 2016 recommendation to fully and regularly incorporate current and future monitors and assessments into FSOC's Systemic Risk Committee deliberations. While GAO encourages sharing this type of information, the Office of Financial Research's Financial Stability Report is a publicly-available report. The intent of GAO's recommendation was to encourage the agency to fully incorporate all of its monitors into Systemic Risk Committee discussions, including its Financial Stability Monitor--its benchmark tool for assessing risks across the financial system. In addition, in its February 2016 report, GAO encouraged the agency to seek ways in which monitors that present disaggregated or otherwise confidential supervisory information can be incorporated in committee discussions. Without sharing such monitors and information, the Systemic Risk Committee may identify and advance the analysis of only a subset of systemic risks in a timely manner and may identify others too late or miss others altogether. The Financial CHOICE Act of 2016 was introduced in the 114th Congress. The act called for the Office of Financial Research to be eliminated. It was not passed before the end of the 114th Congress.
    Recommendation: To help regulators address regulatory fragmentation and improve FSOC's ability to identify emerging systemic risks, the Federal Reserve should work with FSOC to regularly incorporate the comprehensive results of its systemic risk monitoring activities into Systemic Risk Committee deliberations.

    Agency: Federal Reserve System
    Status: Open

    Comments: As of March 1, 2017, Federal Reserve officials indicated that they provided a presentation to FSOC's Systemic Risk Committee in December 2016, which included comprehensive results from its systemic risk monitoring activities. This action appears to be consistent with GAO's February 2016 recommendation, but the documentation provided by the Federal Reserve did not provide sufficient evidence that the agency has regularly incorporated these results into Systemic Risk Committee meetings. GAO will continue to monitor the Federal Reserve's participation in Systemic Risk Committee meetings to ensure that the agency continues to provide both regular and comprehensive results to the committee. Without better access to systemic risk monitoring tools and other outputs, the Systemic Risk Committee may identify and advance the analysis of only a subset of systemic risks in a timely manner and may identify others too late or miss others altogether.
    Recommendation: To more efficiently and effectively monitor the financial system for systemic risks and reduce the risk of unnecessary duplication, OFR and the Federal Reserve should jointly articulate individual and common goals for their systemic risk monitoring activities, including a plan to monitor progress toward articulated goals, and formalize regular strategic and technical discussions around their activities and outputs to support those goals.

    Agency: Department of the Treasury: Financial Stability Oversight Council: Office of Financial Research
    Status: Open

    Comments: As of March 1, 2017, the Federal Reserve and the Office of Financial Research had coordinated to organize semi-annual meetings to jointly discuss views from their respective monitoring of the financial system for risks; but these meetings had not yet taken place. The first of these meetings is to be held in May 2017 following the agencies' respective systemic risk exercises. Initiating these discussions addresses part of GAO's February 2016 recommendation. GAO plans to review documentation from these meetings in 2017 to further assess if the agencies will use these meetings to jointly articulate individual and common goals, including developing a plan to monitor progress toward the goals. Fully addressing GAO's recommendation could help to ensure comprehensiveness in systemic risk surveillance and reduced risk of duplication. On September 9, 2016, the Financial CHOICE Act of 2016 was introduced. It called for the Office of Financial Research to be eliminated. The legislation did not pass before the 114th Congress ended.
    Recommendation: To more efficiently and effectively monitor the financial system for systemic risks and reduce the risk of unnecessary duplication, OFR and the Federal Reserve should jointly articulate individual and common goals for their systemic risk monitoring activities, including a plan to monitor progress toward articulated goals, and formalize regular strategic and technical discussions around their activities and outputs to support those goals.

    Agency: Federal Reserve System
    Status: Open

    Comments: As of March 1, 2017, the Federal Reserve and the Office of Financial Research had coordinated to organize semi-annual meetings to jointly discuss views from their respective monitoring of the financial system for risks; but these meetings had not yet taken place. The first of these meetings is to be held in May 2017 following the agencies' respective systemic risk exercises. Initiating these discussions addresses part of GAO's February 2016 recommendation. GAO plans to review documentation from these meetings in 2017 to further assess if the agencies will use these meetings to jointly articulate individual and common goals, including developing a plan to monitor progress toward the goals. Fully addressing GAO's recommendation could help to ensure comprehensiveness in systemic risk surveillance and reduced risk of duplication. On September 9, 2016, the Financial CHOICE Act of 2016 was introduced. It called for the Office of Financial Research to be eliminated. The legislation did not pass before the 114th Congress ended.
    Director: Clowers, Angela N
    Phone: (202) 512-8678

    4 open recommendations
    including 1 priority recommendation
    Recommendation: FSOC and OFR should clarify responsibility for implementing requirements to monitor threats to financial stability across FSOC and OFR, including FSOC members and member agencies, to better ensure that the monitoring and analysis of the financial system are comprehensive and not unnecessarily duplicative.

    Agency: Department of the Treasury: Financial Stability Oversight Council
    Status: Open
    Priority recommendation

    Comments: As of October 2016, FSOC staff have said FSOC and its members, including OFR, understand their responsibilities, saying that meetings of FSOC's Systemic Risk Committee help to ensure that FSOC member agencies have clarity on their responsibilities and noted that the committee operated under a charter. However, our review of the charter found that it does not clarify responsibilities for monitoring threats to financial stability. They also stated that actions OFR and the Federal Reserve (both of which serve on the Systemic Risk Committee) agreed to take in response to a recommendation in a GAO report issued in February 2016 would help to clarify these responsibilities. However, these represent just two of FSOC's member agencies; similar collaborative steps by other agencies would support the clarity of roles for monitoring threats to financial stability. We maintain that more specific action from FSOC and OFR, including FSOC member and member agencies, is needed to address this recommendation that ensures clarity of roles and responsibilities in proactively and comprehensively monitoring for potential emerging threats in the financial system. Our past work has shown that the lack of clear roles and coordination can lead to duplication, confusion, and regulatory gaps.
    Recommendation: FSOC and OFR should clarify responsibility for implementing requirements to monitor threats to financial stability across FSOC and OFR, including FSOC members and member agencies, to better ensure that the monitoring and analysis of the financial system are comprehensive and not unnecessarily duplicative.

    Agency: Department of the Treasury: Financial Stability Oversight Council: Office of Financial Research
    Status: Open

    Comments: As of March 2017, OFR has taken some steps to work with the Board of Governors of the Federal Reserve System, a member agency of FSOC, to organize semi-annual meetings to jointly discuss views from their respective monitoring of the financial system for risks. We continue to monitor FSOC and OFR actions that would be responsive to clarifying responsibilities for monitoring threats to financial stability across all the agencies that are members of FSOC.
    Recommendation: To strengthen accountability and collaboration in FSOC's decision making, FSOC should establish a collaborative and comprehensive framework for assessing the impact of its decisions for designating FMUs and nonbank financial companies on the wider economy and those entities. This framework should include assessing the effects of subjecting designated FMUs and nonbank financial companies to new regulatory standards, requirements, and restrictions; establishing a baseline from which to measure the effects; and documenting the approach.

    Agency: Department of the Treasury: Financial Stability Oversight Council
    Status: Open

    Comments: In response to an April 2017 presidential memorandum, Treasury is conducting a review of FSOC's designation process, including an assessment of the effects of designating FMUs and nonbank financial companies. This review will result in a report. We will update the status of this recommendation after we have reviewed the report.
    Recommendation: To strengthen accountability and collaboration in FSOC's decision making, FSOC should develop more systematic forward-looking approaches for reporting on potential emerging threats to financial stability in annual reports. Such an approach should provide methodological insight into why certain threats to financial stability are included or excluded over time, separate current or past threats from those that are potentially emerging, and prioritize the latter.

    Agency: Department of the Treasury: Financial Stability Oversight Council
    Status: Open

    Comments: When FSOC publishes its annual report for 2017 and we have reviewed it, we will provide updated information.
    Director: Clowers, Angela N
    Phone: (202)512-3000

    11 open recommendations
    Recommendation: In order to improve the efficiency and effectiveness of their efforts, the federal financial regulators have begun to take steps to address challenges associated with promulgating hundreds of new rules required under the Dodd-Frank Act. To strengthen the rigor and transparency of their regulatory analyses, the federal financial regulators should take steps to better ensure that the specific practices in OMB's regulatory analysis guidance are more fully incorporated into their rulemaking policies and consistently applied.

    Agency: National Credit Union Administration
    Status: Open

    Comments: In June 2016, NCUA told us that it is nearing completion of agency internal policies that standardize and institutionalize the rulemaking process within NCUA. According to agency officials, these policies will document NCUA's current practice related to OMB's regulatory analysis guidance. The policies will be issued to appropriate staff by the end of 2016. At that time, we will review the policies to review the extent to which they incorporate the practices in OMB's regulatory analysis guidance.
    Recommendation: In order to improve the efficiency and effectiveness of their efforts, the federal financial regulators have begun to take steps to address challenges associated with promulgating hundreds of new rules required under the Dodd-Frank Act. To maximize the usefulness of the required retrospective reviews, the federal financial regulatory agencies should develop plans that determine how they will measure the impact of Dodd-Frank Act regulations--for example, determining how and when to collect, analyze, and report needed data.

    Agency: National Credit Union Administration
    Status: Open

    Comments: In June 2016, NCUA noted that all of the agency's regulations are reviewed at least every three years, during an established rotation, so that every year one-third of the agency's regulations are open to comment from the public. NCUA reported that it recently launched a comprehensive multi-year project to update the agency's main data collection and analytic systems. Agency officials stated that the updates will ensure that the agency collects the data needed to assess the effectiveness and impact of applicable regulations. We will continue to monitor NCUA's progress in updating its information systems for purposes of retrospective reviews.
    Recommendation: In order to improve the efficiency and effectiveness of their efforts, the federal financial regulators have begun to take steps to address challenges associated with promulgating hundreds of new rules required under the Dodd-Frank Act. To maximize the usefulness of the required retrospective reviews, the federal financial regulatory agencies should develop plans that determine how they will measure the impact of Dodd-Frank Act regulations--for example, determining how and when to collect, analyze, and report needed data.

    Agency: Department of the Treasury: Office of the Comptroller of the Currency
    Status: Open

    Comments: In March 2017, the federal banking regulators sent Congress their report of the second Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA). Under EGRPRA, the regulators must jointly conduct a review of their regulations every 10 years and consider whether any of the regulations are outdated, unnecessary, or unduly burdensome. The regulators included within their review's scope some regulations issued pursuant to the Dodd-Frank Act. To carry out the EGRPRA review, the regulators generally solicited public comments on their covered regulations through Federal Register notices and public outreach meetings. Although the regulators addressed some of the issues raised by EGRPRA commenters to reduce regulatory burden, they generally focused on identifying regulatory burdens, as required by the law, and not on measuring the impact of the Dodd-Frank Act regulations to assess the extent to which they are achieving their intended purposes. For this reason, our recommendation remains open.
    Recommendation: In order to improve the efficiency and effectiveness of their efforts, the federal financial regulators have begun to take steps to address challenges associated with promulgating hundreds of new rules required under the Dodd-Frank Act. To strengthen the rigor and transparency of their regulatory analyses, the federal financial regulators should take steps to better ensure that the specific practices in OMB's regulatory analysis guidance are more fully incorporated into their rulemaking policies and consistently applied.

    Agency: Federal Reserve System
    Status: Open

    Comments: We sought information from the Board of Governors of the Federal Reserve System in May 2016 regarding the status of the recommendation, but did not receive any new information. Therefore, the recommendation remains open.
    Recommendation: In order to improve the efficiency and effectiveness of their efforts, the federal financial regulators have begun to take steps to address challenges associated with promulgating hundreds of new rules required under the Dodd-Frank Act. To maximize the usefulness of the required retrospective reviews, the federal financial regulatory agencies should develop plans that determine how they will measure the impact of Dodd-Frank Act regulations--for example, determining how and when to collect, analyze, and report needed data.

    Agency: Federal Reserve System
    Status: Open

    Comments: In March 2017, the federal banking regulators sent Congress their report of the second Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA). Under EGRPRA, the regulators must jointly conduct a review of their regulations every 10 years and consider whether any of the regulations are outdated, unnecessary, or unduly burdensome. The regulators included within their review's scope some regulations issued pursuant to the Dodd-Frank Act. To carry out the EGRPRA review, the regulators generally solicited public comments on their covered regulations through Federal Register notices and public outreach meetings. Although the regulators addressed some of the issues raised by EGRPRA commenters to reduce regulatory burden, they generally focused on identifying regulatory burdens, as required by the law, and not on measuring the impact of the Dodd-Frank Act regulations to assess the extent to which they are achieving their intended purposes. For this reason, our recommendation remains open.
    Recommendation: To enhance interagency coordination on regulations issued pursuant to the Dodd-Frank Act, the FSOC should work with the federal financial regulatory agencies to establish formal coordination policies that clarify issues such as when coordination should occur, the process that will be used to solicit and address comments, and what role FSOC should play in facilitating coordination.

    Agency: Department of the Treasury: Financial Stability Oversight Council
    Status: Open

    Comments: In May 2015, FSOC created the Regulations and Resolutions Committee to identify potential gaps in regulation that could pose risks to the U.S. financial stability. The committee's duties include serving as a forum for information sharing and coordination among the FSOC staff, member agencies and other federal and state agencies, as appropriate, regarding domestic financial services policy development, and consulting, as appropriate, on the development of regulations to implement the Dodd-Frank Act's orderly liquidation authority. While the committee's duties should help promote greater collaboration, they do not constitute a formal rulemaking coordination policy addressing, for example, when coordination should occur, processes for soliciting and addressing comments, and FSOC role in facilitating coordination among and between the financial regulators. In its 2010 comment letter, FSOC noted that it provides a forum for interagency collaboration and consultation, in part through its committees, and has not indicated any plans to develop a formal rulemaking coordination policy as we recommended, in part because of its need to preserve the independence of the regulators. Therefore, the recommendation remains open.
    Recommendation: To enhance interagency coordination on regulations issued pursuant to the Dodd-Frank Act, the FSOC should work with the federal financial regulatory agencies to establish formal coordination policies that clarify issues such as when coordination should occur, the process that will be used to solicit and address comments, and what role FSOC should play in facilitating coordination.

    Agency: Federal Reserve System
    Status: Open

    Comments: In May 2015, FSOC created the Regulations and Resolutions Committee to identify potential gaps in regulation that could pose risks to the U.S. financial stability. The committee's duties include serving as a forum for information sharing and coordination among the FSOC staff, member agencies and other federal and state agencies, as appropriate, regarding domestic financial services policy development, and consulting, as appropriate, on the development of regulations to implement the Dodd-Frank Act's orderly liquidation authority. While the committee's duties should help promote greater collaboration, they do not constitute a formal rulemaking coordination policy addressing, for example, when coordination should occur, processes for soliciting and addressing comments, and FSOC role in facilitating coordination among and between the financial regulators. In its 2010 comment letter, FSOC noted that it provides a forum for interagency collaboration and consultation, in part through its committees, and has not indicated any plans to develop a formal rulemaking coordination policy as we recommended, in part because of its need to preserve the independence of the regulators. Therefore, the recommendation remains open.
    Recommendation: To enhance interagency coordination on regulations issued pursuant to the Dodd-Frank Act, the FSOC should work with the federal financial regulatory agencies to establish formal coordination policies that clarify issues such as when coordination should occur, the process that will be used to solicit and address comments, and what role FSOC should play in facilitating coordination.

    Agency: Department of the Treasury: Office of the Comptroller of the Currency
    Status: Open

    Comments: In May 2015, FSOC created the Regulations and Resolutions Committee to identify potential gaps in regulation that could pose risks to the U.S. financial stability. The committee's duties include serving as a forum for information sharing and coordination among the FSOC staff, member agencies and other federal and state agencies, as appropriate, regarding domestic financial services policy development, and consulting, as appropriate, on the development of regulations to implement the Dodd-Frank Act's orderly liquidation authority. While the committee's duties should help promote greater collaboration, they do not constitute a formal rulemaking coordination policy addressing, for example, when coordination should occur, processes for soliciting and addressing comments, and FSOC role in facilitating coordination among and between the financial regulators. In its 2010 comment letter, FSOC noted that it provides a forum for interagency collaboration and consultation, in part through its committees, and has not indicated any plans to develop a formal rulemaking coordination policy as we recommended, in part because of its need to preserve the independence of the regulators. Therefore, the recommendation remains open.
    Recommendation: To enhance interagency coordination on regulations issued pursuant to the Dodd-Frank Act, the FSOC should work with the federal financial regulatory agencies to establish formal coordination policies that clarify issues such as when coordination should occur, the process that will be used to solicit and address comments, and what role FSOC should play in facilitating coordination.

    Agency: United States Securities and Exchange Commission
    Status: Open

    Comments: In May 2015, FSOC created the Regulations and Resolutions Committee to identify potential gaps in regulation that could pose risks to the U.S. financial stability. The committee's duties include serving as a forum for information sharing and coordination among the FSOC staff, member agencies and other federal and state agencies, as appropriate, regarding domestic financial services policy development, and consulting, as appropriate, on the development of regulations to implement the Dodd-Frank Act's orderly liquidation authority. While the committee's duties should help promote greater collaboration, they do not constitute a formal rulemaking coordination policy addressing, for example, when coordination should occur, processes for soliciting and addressing comments, and FSOC role in facilitating coordination among and between the financial regulators. In its 2010 comment letter, FSOC noted that it provides a forum for interagency collaboration and consultation, in part through its committees, and has not indicated any plans to develop a formal rulemaking coordination policy as we recommended, in part because of its need to preserve the independence of the regulators. Therefore, the recommendation remains open.
    Recommendation: To enhance interagency coordination on regulations issued pursuant to the Dodd-Frank Act, the FSOC should work with the federal financial regulatory agencies to establish formal coordination policies that clarify issues such as when coordination should occur, the process that will be used to solicit and address comments, and what role FSOC should play in facilitating coordination.

    Agency: Commodity Futures Trading Commission
    Status: Open

    Comments: In June 2016, CFTC officials stated that FSOC has written protocols for consulting on rules for which coordination is required under the Dodd-Frank Act. Specifically, in May 2015, FSOC created the Regulations and Resolutions Committee to identify potential gaps in regulation that could pose risks to the U.S. financial stability. The committee's duties include serving as a forum for information sharing and coordination among the FSOC staff, member agencies and other federal and state agencies, as appropriate, regarding domestic financial services policy development, and consulting, as appropriate, on the development of regulations to implement the Dodd-Frank Act's orderly liquidation authority. While the committee's duties should help promote greater collaboration, they do not constitute a formal rulemaking coordination policy addressing, for example, when coordination should occur, processes for soliciting and addressing comments, and FSOC role in facilitating coordination among and between the financial regulators. In its 2010 comment letter, FSOC noted that it provides a forum for interagency collaboration and consultation, in part through its committees, and has not indicated any plans to develop a formal rulemaking coordination policy as we recommended, in part because of its need to preserve the independence of the regulators. Therefore, the recommendation remains open.
    Recommendation: To enhance interagency coordination on regulations issued pursuant to the Dodd-Frank Act, the FSOC should work with the federal financial regulatory agencies to establish formal coordination policies that clarify issues such as when coordination should occur, the process that will be used to solicit and address comments, and what role FSOC should play in facilitating coordination.

    Agency: National Credit Union Administration
    Status: Open

    Comments: In June 2016, NCUA stated that it continues to work closely with the other federal financial agencies regarding rulemaking, and formally coordinates with them during joint rulemaking initiatives. Agency officials said they would comply with any future coordination guidance provided by FSOC. In May 2015, FSOC created the Regulations and Resolutions Committee to identify potential gaps in regulation that could pose risks to the U.S. financial stability. The committee's duties include serving as a forum for information sharing and coordination among the FSOC staff, member agencies and other federal and state agencies, as appropriate, regarding domestic financial services policy development, and consulting, as appropriate, on the development of regulations to implement the Dodd-Frank Act's orderly liquidation authority. While the committee's duties should help promote greater collaboration, they do not constitute a formal rulemaking coordination policy addressing, for example, when coordination should occur, processes for soliciting and addressing comments, and FSOC role in facilitating coordination among and between the financial regulators. In its 2010 comment letter, FSOC noted that it provides a forum for interagency collaboration and consultation, in part through its committees, and has not indicated any plans to develop a formal rulemaking coordination policy as we recommended, in part because of its need to preserve the independence of the regulators. Therefore, the recommendation remains open.
    Director: Brown, Orice Williams
    Phone: (202)512-5837

    4 open recommendations
    Recommendation: While creating control systems at the same time that the emergency programs were being designed and implemented posed unique challenges, the recent crisis provided invaluable experience that the Federal Reserve System can apply in the future should the use of these authorities again become warranted. Going forward, to further strengthen policies for selecting vendors, ensuring the transparency and consistency of decision making involving the implementation of any future emergency programs, and managing risks related to these programs, the Chairman of the Federal Reserve Board should direct Federal Reserve Board and Reserve Bank staff to strengthen procedures in place to guide Reserve Banks' efforts to manage emergency program access for higher-risk borrowers by providing more specific guidance on how Reserve Bank staff should exercise discretion and document decisions to restrict or deny program access for depository institutions and primary dealers that would otherwise be eligible for emergency assistance.

    Agency: Federal Reserve System: Board of Governors
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: While creating control systems at the same time that the emergency programs were being designed and implemented posed unique challenges, the recent crisis provided invaluable experience that the Federal Reserve System can apply in the future should the use of these authorities again become warranted. Going forward, to further strengthen policies for selecting vendors, ensuring the transparency and consistency of decision making involving the implementation of any future emergency programs, and managing risks related to these programs, the Chairman of the Federal Reserve Board should direct Federal Reserve Board and Reserve Bank staff to document a plan for estimating and tracking losses that could occur under more adverse economic conditions within and across all emergency lending activities and for using this information to inform policy decisions, such as decisions to limit risk exposures through program design or restrictions applied to eligible borrowing institutions.

    Agency: Federal Reserve System: Board of Governors
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: While creating control systems at the same time that the emergency programs were being designed and implemented posed unique challenges, the recent crisis provided invaluable experience that the Federal Reserve System can apply in the future should the use of these authorities again become warranted. Going forward, to further strengthen policies for selecting vendors, ensuring the transparency and consistency of decision making involving the implementation of any future emergency programs, and managing risks related to these programs, the Chairman of the Federal Reserve Board should direct Federal Reserve Board and Reserve Bank staff, in drafting regulations to establish the policies and procedures governing emergency lending under section 13(3) of the Federal Reserve Act, to set forth the Federal Reserve Board's process for documenting, to the extent not otherwise required by law, its justification for each use of this authority.

    Agency: Federal Reserve System: Board of Governors
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: While creating control systems at the same time that the emergency programs were being designed and implemented posed unique challenges, the recent crisis provided invaluable experience that the Federal Reserve System can apply in the future should the use of these authorities again become warranted. Going forward, to further strengthen policies for selecting vendors, ensuring the transparency and consistency of decision making involving the implementation of any future emergency programs, and managing risks related to these programs, the Chairman of the Federal Reserve Board should direct Federal Reserve Board and Reserve Bank staff to document the Federal Reserve Board's guidance to Reserve Banks on types of emergency program decisions and risk events that require approval by or consultation with the Board of Governors, the Federal Open Market Committee, or other designated groups or officials at the Federal Reserve Board.

    Agency: Federal Reserve System: Board of Governors
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Director: Clark, Cheryl E
    Phone: (202)512-9377

    2 open recommendations
    Recommendation: The Director of Personnel and Administration at Commission headquarters should follow established policies and procedures in taking action to conduct a review of contracts and purchase orders outstanding for completeness, accuracy, and proper dates.

    Agency: American Battle Monuments Commission: Human Resources and Administration Director
    Status: Open

    Comments: In response to this recommendation, the Commission stated that it completed such a review in fiscal year 2009 and made corrections as to how the Commission issues contracts and purchase orders. In addition, the Commission hired a consultant, a retired Federal Government Contracting Officer, to assist with contracting activities and to help draft and implement the Commission's policies and procedures. During our fiscal year 2010 audit, we found errors in relation to the Commission's contracts and found that Headquarter's Active Contracts List for contracts over $100,000 was not up to date. We found 3 out of 20 expenditures we tested that were obligated before there was a signed contract. During our fiscal year 2011 audit, we found that the Headquarter's Active Contracts List for contracts over $100,000 was not being kept up to date and reconciled to the undelivered orders account. During our fiscal year 2012 audit, we found there were no policies and procedures for processing engineering contracts. We were informed by the Commission that they were in the process of documenting policies and procedures for the entire contracting process. We also found there were no documented policies and procedures for reviewing year end open obligations and accounts payable to verify the accuracy and validity of year end balances. Additionally, there was no documented review of accounts payable or open obligations performed at year-end for all the open contracts. As a result, we found errors in year-end aged vendor liability reports and open purchase orders that no longer represented valid obligations and should have been deobligated. During our fiscal year 2017 follow-up, the Commission informed us that they plan to establish procurement-related policies and procedures to address our recommendation. We will follow up on this open recommendation at a later date.
    Recommendation: The Director of Personnel and Administration at Commission headquarters should follow established policies and procedures in taking action to coordinate procurement activity with finance personnel to ensure accurate and compliant obligation of funding of procurements, including proper application of multiyear contract terms.

    Agency: American Battle Monuments Commission: Human Resources and Administration Director
    Status: Open

    Comments: In response to this recommendation, the Commission stated that acquisition personnel would ensure coordination with finance personnel to be certain that accurate and compliant obligation of funding of procurements, including proper application of multi-year contract terms. During our fiscal year 2010 and 2011 audits, we found errors in relation to the Commission's contracts and determined improvements were still needed in the oversight of contracts. During our fiscal year 2012 audit, we found there were no policies and procedures for processing engineering contracts. We were informed by the Commission that they were in the process of documenting policies and procedures for the entire contracting process. We also found there were no documented policies and procedures for reviewing year end open obligations and accounts payable to verify the accuracy and validity of year end balances. Additionally, there was no documented review of accounts payable or open obligations performed at year-end for all the open contracts. As a result, we found errors in year-end aged vendor liability reports and open purchase orders that no longer represented valid obligations and should have been deobligated. During our fiscal year 2017 follow-up, the Commission informed us that they plan to establish procurement-related policies and procedures to address our recommendation. We will follow up on this open recommendation at a later date.
    Director: Brown, Orice Williams
    Phone: (202)512-3000

    1 open recommendations
    Recommendation: To help ensure that CFTC and SEC are strategically positioned to implement the joint report's recommendations and address remaining harmonization opportunities, as CFTC and SEC continue to develop the charter for the Joint Advisory Committee, the Chairmen of CFTC and SEC should take steps to establish, with associated time frames, clearer goals for future harmonization efforts and requirements for reporting and evaluating progress toward these goals. Specifically, the agencies could benefit from formalizing a plan to assess implementation of the joint report's recommendations and harmonization opportunities that may not have been fully addressed by the joint report, such as differences in market structure and investor definitions. Such a plan could include goals for future harmonization efforts, such as time frames for implementing the recommendations; assessment of whether remaining differences in statutes and regulations result in inconsistent regulation of similar products and entities that could lead to opportunities for regulatory arbitrage; and periodic reports to Congress on their progress, including the implementation and impact of the recommendations.

    Agency: Commodity Futures Trading Commission
    Status: Open

    Comments: In August 2014, CFTC staff confirmed that CFTC had not taken steps to implement this recommendation. According to CFTC staff, since the issuance of the GAO report in April 2010, CFTC has prioritized implementing Dodd-Frank Act requirements related to harmonization and has not established a plan or specific goals related to harmonization.
    Director: White, James
    Phone: (202) 512-3000

    1 open recommendations
    Recommendation: The Congress may wish to consider broadening IRS's ability to use math error authority (MEA), with appropriate safeguards against misuse of that authority.

    Agency: Congress
    Status: Open

    Comments: Congress has expanded IRS's math error authority in certain circumstances, but not as broadly as we suggested in February 2010. Congress enacted legislation in December 2015 that expands the circumstances in which IRS may use math error authority. Section 208 of division Q of the Consolidated Appropriations Act, 2016 (Public Law 114-113) gives IRS the authority to use math error authority if (1) a taxpayer claimed the Earned Income Tax Credit, Child Tax Credit, or the American Opportunity Tax Credit (AOTC) during the period in which a taxpayer is not permitted to claim such credit as a consequence of either having made a prior fraudulent or reckless claim; or (2) a taxpayer omitted information required to be reported because the taxpayer made prior improper claims of the Child Tax Credit or the AOTC. While expanding math error authority is consistent with what we recommended Congress consider, we had suggested that math error authority be authorized on a broader basis with appropriate controls rather than on a piecemeal basis. Our previous work has identified additional tax provisions for which expanded math error authority would be helpful, such as the First-Time Homebuyer Credit, Individual Retirement Accounts, and Residential Energy Property Credit. While Congress expanded math error authority for the First-Time Homebuyer Credit in November 2009 and for other individual credits as previously described, we maintain that a broader authorization of math error authority with appropriate controls would enable IRS to correct obvious noncompliance, would be less intrusive and burdensome to taxpayers than audits, and would potentially help taxpayers who underclaim tax benefits to which they are entitled. If Congress decides to extend broader math error authority to IRS, controls may be needed to ensure that this authority is used properly. Our prior work identified potential controls, such as requiring IRS to report on its use of math error authority. The administration also requested that Congress grant the Department of the Treasury regulatory authority to expand IRS's use of math error authority as part of its budget submission for fiscal year 2017. The 114th Congress did not provide Treasury with such authority. The Joint Committee on Taxation estimated this change could raise $274 million through fiscal years 2018 through 2026.
    Director: Williams, Orice M
    Phone: (202)512-5837

    1 open recommendations
    Recommendation: To address the current information gap in Regulation SHO for prime brokerage arrangements and mitigate the impact of any unintended consequences caused by SEC rules, as well as ensure consistent implementation of SEC rules by the industry, the Chairman of the Securities and Exchange Commission should finalize, in an expedited manner upon finalization of the temporary rule, the revised 1994 Prime Broker Letter.

    Agency: United States Securities and Exchange Commission
    Status: Open

    Comments: As of 7/18/13, the revised Prime Broker letter has not been finalized.