U.S.	Securities	and	Exchange	Commission	
 

Management	Report	to	Accompany	

the	Office	of	Inspector	General	

Semiannual	Report	to	Congress	
 

for	the	period	April	1,	2016	through	September	30,	2016	

November	2016
     

               

       

               

           

       

	 	

                        

     

                     

                             

                      

                   

                         

             

                       

                           

U.S.	SECURITIES	AND	EXCHANGE	COMMISSION

Management Report to Accompany the Office of Inspector
 

General Semiannual Report Congress
 

April 1, 2016 – September 30, 2016

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	April	1,	2016	through	September	30,	2016.	

I. Overview of SEC Audit Follow‐up Activities

The	SEC’s	audit	follow‐up	efforts	continue to	play	a	significant	role	in	the	effective	management	of	

the	agency’s	operations	and	the	accomplishment	of	its	mission.	 At the	commencement of	this	

semiannual	reporting	period,	there	were 20	open	audit	recommendations.		During	the	period,	

management	successfully	closed	12	recommendations	and	4	reports with	OIG’s	concurrence.			At	

period‐end,	final	action	was pending	for	seven	reports,	including	six	reports	received	in	FY	2016.	

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 0 $0

B. On which management decisions were made during the reporting period 1 $177,000

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 1
     

	 	 	 	

	 	

                        

           

         

     

     

                             

                      

                   

                     

                      

                 

                             

                   

	 	

                      

               

             

           

   

   

     

   

  

           

             

          

          

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.		The	SEC	will	seek	

reimbursement	should	any	shortage	of	required	training	occur.	

At	the	end	of	the	period,	the	OIG	issued	a	report	on	the	SEC’s	IT	requirements‐gathering	process	

(Report No.	538,	dated	9/30/16).		The	OIG	identified	$24,230	paid	to	a	contractor	hired	to	gather	

requirements	as	questioned	costs.		The	management decision	is	due	in	November.

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 (SLRP)	

(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,	during	the	six‐month	period,	the	SEC	

recovered	$66,648	(includes full	payment from	seven	former	employees).		Three	former	employees	

have	established	repayment	plans	with	balances	totaling $57,455.		The	remaining	balance of	

$91,902	has	been	referred	to	Treasury	for	collection.			

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	presents	the	required	information.	

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

(Reporting Period April 1, 2016 through September 30, 2016)

Report No./Title Report Date Funds Put to

Better Use

Disallowed

Costs Status of Final Action

529, Federal

Information Security

Management Act: FY

2014 Evaluation

2/5/2015 $0 $0

The Office of Information Technology provided the

OIG with additional documentation to close the

remaining recommendation after the period ended.

OIG is reviewing the documentation.

SEMIANNUAL MANAGEMENT REPORT TO CONGRESS 2