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Financial Audit: Securities and Exchange Commission's Fiscal Years 2014 and 2013 Financial Statements

GAO-15-166R Published: Nov 17, 2014. Publicly Released: Nov 17, 2014.
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What GAO Found

GAO found (1) the United States Securities and Exchange Commission's (SEC) and its Investor Protection Fund's (IPF) financial statements as of and for the fiscal years ended September 30, 2014, and 2013, were presented fairly, in all material respects, in accordance with U.S. generally accepted accounting principles; (2) SEC maintained, in all material respects, effective internal control over financial reporting for SEC and IPF as of September 30, 2014, although internal control deficiencies exist that merit attention by those charged with governance; and (3) no reportable noncompliance in fiscal year 2014 with provisions of applicable laws, regulations, contracts, and grant agreements GAO tested. During fiscal year 2014, SEC made progress in addressing internal control deficiencies GAO reported in fiscal year 2013. Specifically, SEC sufficiently addressed the deficiencies in its information security such that GAO no longer considers the remaining control deficiencies in this area, individually or collectively, to represent a significant deficiency as of September 30, 2014. However, during GAO's fiscal year 2014 audit, it identified continuing and new deficiencies in SEC's internal control over disgorgement and penalty transactions that constituted a significant deficiency in SEC's internal control over financial reporting. This significant deficiency pertained to SEC's overall financial reporting but not that of IPF because IPF does not have disgorgement and penalty financial transactions. In commenting on a draft of this report, SEC's Chair expressed her pleasure that GAO found that SEC no longer has a significant deficiency reported in fiscal year 2013 related to information security. The Chair added that SEC will focus on the significant deficiency GAO reported in 2014 related to accounting for disgorgements and penalties.

Why GAO Did This Study

The Accountability of Tax Dollars Act of 2002 requires that SEC annually prepare and submit audited financial statements to Congress and the Office of Management and Budget. The Securities Exchange Act of 1934, as amended in 2010 by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), requires SEC to annually prepare and submit a complete set of audited financial statements for its IPF to Congress. GAO audited the financial statements of SEC and IPF pursuant to its authority conferred by the Chief Financial Officers Act of 1990, as amended by the Government Management and Reform Act of 1994. Section 963 of the Dodd-Frank Act further requires that (1) SEC annually submit a report to Congress describing management's responsibility for internal control over financial reporting and assessing the effectiveness of such internal control during the fiscal year, (2) the SEC Chairman and Chief Financial Officer attest to SEC's report, and (3) GAO attest to and report on the assessment made by SEC. Accordingly, this report also includes GAO's reporting in response to the requirement under the Dodd-Frank Act.

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