Securities and Exchange Commission

Management Report to Accompany the 

Semiannual Report of the Inspector 

General

for the period October 1, 2013 through March 31, 2014

_____________________________________

May 2014
U.S. SECURITIES AND EXCHANGE COMMISSION

MANAGEMENT REPORT TO ACCOMPANY THE 

SEMIANNUAL REPORT OF THE INSPECTOR GENERAL 

(October 1, 2013 – March 31, 2014) 

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, 2013 through

March 31, 2014. 

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. During the sixmonth period ending March 31, 2014, SEC divisions and offices closed 27 recommendations

with the OIG’s concurrence. 

 

The Office of the Chief Operating Officer (OCOO) is responsible for the agency’s 

systems of audit follow-up, resolution, and corrective action. To ensure timeliness of resolution 

decisions and corrective actions, the OCOO continued to hold regular meetings with select SEC 

offices and received regular progress reports from all SEC divisions and offices with open audit 

recommendations. The OCOO also maintained continuous liaison with the Office of the Inspector 

General to facilitate the resolution and closure process. 

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.

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 
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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 1 (below) presents the required information on audit, inspection, and evaluation 

reports with disallowed costs or recommendations that funds be put to better use. The SEC 

began and ended the period with no open reports with monetary findings. 

Table 1: Status of Final Action on Audit, Inspection, and 

Evaluation Reports with Disallowed Costs or Funds Put to Better Use

Audit, Inspection, and Evaluation Reports Number

Dollar 

Value of 

Disallowed 

Costs

Dollar Value 

of Funds Put 

to Better Use

A. For which final action had not been taken by the 

beginning of the reporting period (10/1/13)

0 $0 $0

B. On which management decisions were made during 

the reporting period (10/1/13 –3/31/14)

0 $0 $0

C. For which final action was taken during the reporting 

period 

0 $0 $0

(i) Dollar value of disallowed costs that were 

recovered through collection, offsets, property 

in lieu of cash, or otherwise

0 $0

$0

(ii) Dollar value of disallowed costs that were 

written off by management

0 $0 $0

(iii) Dollar value of recommendations that 

management has subsequently concluded 

should not or could not be implemented or 

completed

0 $0 $0

D. For which no final action has been taken by the end of 

the reporting period (3/31/14)

0 $0 $0
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III. Reports More than One Year Old with Pending Corrective Action 

Section 5(b)(4) of the Inspector General Act 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 2 (below) presents the required information. 

Table 2: Audits and Other Reports More than One Year Old

(Reporting Period October 1, 2013 through March 31, 2014)

Report No./Title

Report 

Date

Funds Put 

to Better 

Use 

Disallowed 

Costs Status of Final Action

489, Federal 

Information Security 

Management Act 

(FISMA) 2010 

Assessment 

3/3/11 $0 $0 7 of 8 recommendations from this report 

have been closed. Logical integration of 

HSPD-12 access cards has presented 

challenges government-wide. The SEC 

actively participates with an inter-agency 

task force dedicated to solving the 

associated problems and finding a 

workable solution. The Office of 

Information Technology is actively 

working this project with a pilot 

scheduled to begin in June 2014 and full 

agency deployment by calendar yearend. 

501, Federal 

Information Security 

Management Act 

2011 Assessment

2/2/12 $0 $0 11 of 13 recommendations have been 

closed. One of the two remaining 

recommendations is a duplicate of the 

open recommendation in audit 489 

discussed above. The other is being 

addressed as part of a comprehensive 

OIT security policy review project. The 

target completion date is April 30, 2014. 

512, 2012 FISMA 

Executive Summary 

Report

8/11/11 $0 $0 12 of 13 recommendations from this 

report have been closed. Final action 

was delayed on the remaining 

recommendation due to additional 

guidance from OMB and the 

government-wide Continuous 

Monitoring Program. The target 

completion date is April 30, 2014.

514, Audit of the 

SEC’s Filing Fees 

Program

3/29/13 $0 $0 3 of 4 recommendations have been 

closed. An ongoing review of registrant 

accounts is on track to be completed in 

June 2014 and to close the remaining 

open recommendation.