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Information Security: SEC Improved Control of Financial Systems but Needs to Take Additional Actions

GAO-17-469 Published: Jul 27, 2017. Publicly Released: Jul 27, 2017.
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What GAO Found

The Securities and Exchange Commission (SEC) improved the security controls over its key financial systems and information. In particular, as of September 2016, the commission had resolved 47 of the 58 recommendations we had previously made that had not been implemented by the conclusion of the FY 2015 audit. However, SEC had not fully implemented 11 recommendations that included consistently protecting its network boundaries from possible intrusions, identifying and authenticating users, authorizing access to resources, auditing and monitoring actions taken on its systems and network, or encrypting sensitive information while in transmission.

In addition, 15 newly identified control deficiencies limited the effectiveness of SEC's controls for protecting the confidentiality, integrity, and availability of its information systems. For example, the commission did not consistently control logical access to its financial and general support systems. In addition, although the commission enhanced its configuration management controls, it used unsupported software to process financial data. Further, SEC did not adequately segregate incompatible duties for one of its personnel. These weaknesses existed, in part, because SEC did not fully implement key elements of its information security program. For example, SEC did not maintain up-to-date network diagrams and asset inventories in its system security plans for its general support system and its key financial system application to accurately and completely reflect the current operating environment. The commission also did not fully implement and continuously monitor those systems' security configurations. Twenty-six information security control recommendations related to 26 deficiencies found in SEC's financial and general support systems remained unresolved as of September 30, 2016. (See table.)

SEC Progress Toward Implementing GAO Information Security Recommendations as of September 30, 2016

Information security control area

Prior GAO recommendations open outstanding at start of fiscal year (FY) 2016 audit

Recommendations closed during FY 2016 audit

New recommendations

Outstanding recommendations end of FY 2016 audit

Information security program





Access controls





Other controls










Source: GAO analysis of Securities and Exchange Commission data. | GAO-17-469

Cumulatively, the deficiencies decreased assurance about the reliability of the data processed by key SEC financial systems. While not individually or collectively constituting a material weakness or significant deficiency, these deficiencies warrant SEC management's attention. Until SEC mitigates these deficiencies, its financial and support systems and the information they contain will continue to be at unnecessary risk of compromise.

Why GAO Did This Study

SEC enforces securities laws, issues rules and regulations that provide protection for investors, and helps to ensure that securities markets are fair and honest. SEC uses computerized information systems to collect, process, and store sensitive information, including financial data. Having effective information security controls in place is essential to protecting these systems and the information they contain.

Pursuant to statutory authority, GAO assesses the effectiveness of SEC's internal control structure and procedures for financial reporting. As part of its audit of SEC's fiscal years 2016 and 2015 financial statements, GAO assessed whether controls were effective in protecting the confidentiality, integrity, and availability of key financial systems and information. To do this, GAO examined SEC's information security policies and procedures, tested controls, and interviewed key officials on whether controls were in place, adequately designed, and operating effectively.

Skip to Recommendations


In addition to the 11 prior recommendations that have not been fully implemented, GAO recommends that SEC take 13 actions to address newly identified control deficiencies and 2 actions to more fully implement its information security program. In commenting on a draft of this report, SEC concurred with GAO's recommendations.

Recommendations for Executive Action

Agency Affected Recommendation Status
United States Securities and Exchange Commission
Priority Rec.
To effectively manage its information security program, the Chairman of the SEC should maintain up-to-date network diagrams and asset inventories in the system security plans for General Support System and a key financial system to accurately and completely reflect the current operating environment.
Closed – Implemented
SEC agreed with this recommendation and has taken steps to implement it. Specifically, the agency has updated its systems security plans with network diagrams as well as created a hardware asset inventory to reflect the operating environment for its GSS and key financial system.
United States Securities and Exchange Commission
Priority Rec.
To effectively manage its information security program, the Chairman of the SEC should perform continuous monitoring using automated configuration and vulnerability scanning on the operating systems, databases, and network devices.
Closed – Implemented
SEC agreed with, and has addressed, this recommendation. Specifically, we verified in July 2018 that SEC is performing vulnerability and compliance scanning for key operating systems, databases, network devices, and firewalls. By performing vulnerability scanning, SEC is better positioned to identify and address potential deficiencies that could affect the integrity and availability of its information systems.

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Access control listComputer securityConfidential communicationsConfiguration controlData integrityFinancial management systemsInformation securityInformation systemsInternal controlsSystem security plansFinancial reportingFinancial systems