U.S.	Securities	and	Exchange	Commission	

Management	Report	to	Accompany	

the	Office	of	Inspector	General	

Semiannual	Report	to	Congress	

for	the	period	October	1,	2016	through	March	31,	2017	

May	2017
SEMIANNUAL MANAGEMENT REPORT TO CONGRESS 1

U.S.	SECURITIES	AND	EXCHANGE	COMMISSION

Management Report to Accompany the  

Office of Inspector General Semiannual Report to Congress

October 1, 2016 – March 31, 2017

Section	5(b)	of	the	Inspector	General	Act	of	1978,	as	amended,	requires	the	Commission	to	transmit	

to	the	appropriate	committees	or	subcommittees	of	the	U.S.	Congress	a	Management	Report,	

containing	certain	statistical	tables	and	any	comments	deemed	appropriate,	to	accompany	the	Office	

of	Inspector	General’s	(OIG’s)	Semiannual	Report.		This	Management	Report	presents	the	required	

information	for	the	reporting	period	of	October	1,	2016	through	March	31,	2017.	

I. Overview of SEC Audit Follow‐up Activities

The	SEC	is	committed	to	timely	completion	of	corrective	actions	on	audit	recommendations.		At	the	

commencement	of	this	semiannual	reporting	period,	there	were	33	open	recommendations.		During	

the	period,	management	successfully	closed	21	recommendations	and	four	reports	with	OIG’s	

concurrence.		Corrective	actions	were	completed	on	95	percent	of	the	recommendations	in	less	than	

one	year.		At	period‐end,	final	action	was	pending	on	six	reports,	of	which	five	were	less	than	a	year	

old.				

II. Reports with Monetary Savings

Sections	5(b)(2)	and	(3)	of	the	Inspector	General	Act	require	the	SEC	Management	 Report	to	

include	statistical	tables	summarizing	the	progress	that	the	agency	has	made	in	responding	to	audit,	

inspection,	and	evaluation	reports	containing	“disallowed	costs”	and	“recommendations	that	funds	

be	put	to	better	use.”	

Disallowed Costs.	 Whenever	OIG	questions	whether	costs	incurred	by	the	agency	are	 necessary,	

supported	by	adequate	documentation,	or	in	accordance	with	law,	regulation,	or	 contracts	

governing	the	use	of	funds,	SEC	management	will	review	the	facts	and	determine	 whether	such	

costs	should	be	officially	disallowed.	If	the	SEC	agrees	that	such	costs	should	not	 be	charged	to	the	

government,	the	agency	will	then	take	appropriate	action,	such	as	commencing	 collection	efforts	to	

recover	the	disallowed	costs.			

Table 1. Status of Final Action on Audit, Inspection and Evaluation Reports  

with Disallowed Costs

Audit, Inspection and Evaluation Reports Number Dollar Value of

Disallowed Costs

A. For which final action had not been taken by the beginning of the reporting period 1 $177,000

B.   On which management decisions were made during the reporting period 0 $0

C. For which final action was taken during the reporting period 0 $0

(i) Dollar value of disallowed costs that were recovered through collection, offsets,

property in lieu of cash, or otherwise 0 $0

(ii) Dollar value of disallowed costs that were written off by management 0 $0

D. For which no final action has been taken by the end of the period 1 $177,000

On	June	22,	2016,	the	OIG	issued	a	report	entitled	“Management	of	the	SEC’s	Protective	Security	

Force	Contract	Needs	Improvement”	(Report	No.	536).			The	OIG	did	not	identify	any	concerns	with	
SEMIANNUAL MANAGEMENT REPORT TO CONGRESS 2

the	performance	of	the	SEC’s	protective	security	force.		However,	OIG	found	the	difference	in	

contractually	required	versus	actual	training	hours	resulted	in	questioned	costs	of	about	$177,000.			

The	SEC	issued	a	contract	modification	effective	August	31,	2016,	which	revised	the	statement	of	

work	to	clarify	and	strengthen	the	requirements	for	training,	among	other	things.		As	of	March	31,	

2017,	the	contractor	had	met	95	percent	of	the	training	requirements	and	was	on	track	to	complete	

the	remaining	training	in	April.				

Funds Put to Better Use.		Whenever	OIG	recommends	specific	dollar	amounts	that	it	 believes	can	be	

saved	by	improving	the	efficiency	of	agency	operations,	SEC	management	will	 review	the	facts	and	

determine	whether	to	implement	such	recommendations.	 “Funds	put	to	 better	use”	refers	to	the	

specific	dollar	value	of	cost	savings	that	the	SEC	has	agreed	can	and	 should	be	implemented	through	

appropriate	corrective	action.	

Table 2. Status of Final Action on Audit, Inspection and Evaluation Reports  

with Funds Put to Better Use

Audit, Inspection and Evaluation Reports Number

Dollar Value of

Funds Put to

Better Use

A. For which final action had not been taken by the beginning of the reporting period 1 $216,000

B.   On which management decisions were made during the reporting period 0 $0

C. For which final action was taken during the reporting period 0 $0

(i) Dollar value of recommendations that were actually completed    $0

   (ii) Dollar value of recommendations that management has subsequently concluded

should not or could not be implemented or completed $0

D. For which no final action has been taken by the end of the reporting period 1 $216,000

On	March	31,	2016,	the	OIG	issued	a	report	on	the	SEC’s	Student	Loan	Repayment	Program	(Report	

No.	534).		The	audit	identified	about	$216,000	in	student	loan	benefits	owed	to	the	SEC	by	17	former	

employees.		While	final	action	remains	underway,	as	of	March	31,	2017,	the	SEC	had	recovered	

$88,707	and	waived	$18,208	due	to	financial	hardship.		Payment	plan	balances	totaled	$23,599	and	

the	balance	of	claims	referred	to	Treasury	for	collection	totaled	$85,492.					

Status of Other OIG Report Containing Questioned Costs.		On	September	30,	2016,	the	OIG	issued	a	

report	on	the	SEC’s	information	technology	requirements‐gathering	process	(“Audit	of	SEC’s	

Information	Technology	Requirements‐Gathering	Process,”	Report	No.	538).		OIG	found	that	for	a	9‐

month	period,	the	SEC	paid	a	contractor	hired	to	perform	requirements‐gathering	activity	for	a	

specific	project	$24,230	even	though	monthly	status	reports	indicated	that	no	such	activity	occurred	

during	that	period.		The	SEC’s	Senior	Procurement	Official	and	the	Contracting	Officer	reviewed	the	

matter	and	determined	that	costs	were	supported	for	the	9‐month	period	because	the	contractor	

engaged	in	project	management	activities	that	were	within	the	scope	of	the	agreement.			

III. Reports More than One Year Old with Pending Corrective Action

Section	5(b)(4)	of	the	Inspector	General	Act,	as	amended,	requires	the	SEC	Management	

Report	to	include	a	statement	with	respect	to	audit	reports	on	which	management	decisions	have	

been	made	but	final	action	has	not	been	taken,	other	than	audit	reports	on	which	a	management	

decision	was	made	within	the	preceding	year.	Table	3	on	the	following	page	presents	the	required	

information.	
SEMIANNUAL MANAGEMENT REPORT TO CONGRESS 3

Table 3. Audits and Other Reports More than One Year Old  

(Reporting Period October 1, 2016 through March 31, 2017)

Report No./Title Report Date Funds Put to

Better Use

Disallowed

Costs Status of Final Action

534, Audit of SEC’s

Student Loan

Repayment Program

3/31/2016 $0 $216,000 Five of nine recommendations have been closed

with OIG’s concurrence.  After consulting with the

OIG, the Office of Human Resources is preparing

additional documentation to support closure of the

remaining four recommendations.