|  | | 2007 News and Press Releases | | |
HEADLINE NEWS:
GAO Finds Material Weakness in SEC's Controls, After squeaking by last year, the SEC's internal controls over financial reporting are found to have a material weakness in the government equivalent of a section 404 audit.
Stephen Taub
cfo.com. November 20, 2007
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EXCERPT: The Government Accountability Office said Monday that the Securities and Exchange Commission had a material weakness in the internal controls over its financial reporting. The GAO's report said that data related to accounts receivable balances is processed manually at the SEC in a manner that is prone to error and could result in inaccurate financial reporting by the agency. The news is a blow to the SEC, which was criticized by the GAO in 2006 for the same manual processes, but narrowly avoided a material weakness by putting in place extra controls to compensate for them. The GAO said those controls were not effective in 2007. The GAO added that the SEC's material weakness also included other control deficiencies related to the SEC's period-end closing process, accounting for transaction fee revenue and preparation of financial statement disclosures. The news is also a moral blow the agency, which is responsible for implementing and enforcing the provisions of the Sarbanes-Oxley Act for publicly-listed companies. Section 404 of the act requires that companies maintain internal controls over financial reporting, and requires its CEO and CFO to attest to their effectiveness. In response, SEC chairman Christopher Cox said that in 2008 the commission will introduce new software systems designed to eliminate the material weakness in the SEC's internal controls. "The SEC intends to remediate this material weakness before the end of fiscal 2008 and to address each of the findings and recommendations identified during the audit," said Cox in a letter to Comptroller General David Walker. |
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