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May 16

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GAO Tells SEC to Look in the Mirror Regarding Internal Control Failures

The U.S. Government Accountability Office (“GAO”), a government watchdog group, recently reported the results of its 2014 audit of the Securities and Exchange Commission (“SEC”) financial statements.  The findings included (i) troubling reports of internal control failures at the very agency tasked with policing the reporting activities of others and (ii) warnings of vulnerability to cyber attacks on the highly confidential information stored at the SEC.

The most serious area of deficiency involves financial reporting controls over accounting for disgorgement and penalty transactions.  Such deficiencies were so significant that the GAO reported that they may adversely affect the accuracy and completeness of information used and reported by the SEC.  In addition, the GAO found that 15 of its prior internal control recommendations with regard to information system controls (information security) were still open, albeit in process. This related article provides more detailed descriptions of the findings and recommended internal controls.

About the author

Renee Howdeshell

Renee Howdeshell is a founding member of Fulcrum Inquiry, an accounting, finance and economic consulting firm that performs damage analyses for commercial litigation, forensic accountings, royalty & distribution audits, financial investigations, and business valuations. Ms. Howdeshell holds a degree in Finance and Marketing from the University of Virginia's McIntire School of Commerce and is a Certified Public Accountant (CPA) and a Certified Fraud Examiner (CFE). She has testified as an expert witness in federal court, CA state court and arbitration regarding the results of her work. She can be reached at (213) 787-4112 and her resume is available at www.fulcrum.com.

Permanent link to this article: http://betweenthenumbers.net/2015/05/gao-tells-sec-to-look-in-the-mirror-regarding-internal-control-failures/

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