Improvements Needed in Oversight of SECSponsored Conferences

February 11, 2016

Report No. 532
 UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 OFFICE OF

INSPECTOR GENERAL

M E M O R A N D U M

February 11, 2016

TO: Jeffery Heslop, Chief Operating Officer

FROM: Carl W. Hoecker, Inspector General

SUBJECT: Improvements Needed in Oversight of SEC-Sponsored Conferences,

Report No. 532

Attached is the Office of Inspector General (OIG) final report detailing the results of our audit of 

the U.S. Securities and Exchange Commission’s (SEC or agency) oversight of SEC-sponsored 

conferences. The report contains six recommendations that should help the SEC improve 

oversight of SEC-sponsored conferences, comply with applicable laws and agency policy and 

requirements, and ensure that goals and objectives are met.

On January 26, 2016, we provided management with a draft of our report for review and 

comment. In its February 2, 2016, response, management concurred with our 

recommendations. We have included the response as Appendix III in the final report. 

We are pleased that SEC management concurred with and took immediate action to address 

all six recommendations for corrective action. Management’s completed actions are 

responsive to the recommendations; therefore, the recommendations are resolved and closed 

for reporting purposes based on our verification of management’s completed corrective 

actions. 

We appreciate the courtesies and cooperation extended to us during the audit. If you have 

questions, please contact me or Rebecca L. Sharek, Deputy Inspector General for Audits, 

Evaluations, and Special Projects.

Attachment

cc: Mary Jo White, Chair 

Andrew Donohue, Chief of Staff, Office of the Chair

Michael Liftik, Deputy Chief of Staff, Office of the Chair

Nathaniel Stankard, Deputy Chief of Staff, Office of the Chair

Michael S. Piwowar, Commissioner

Jaime Klima, Counsel, Office of Commissioner Piwowar

Kara M. Stein, Commissioner

Robert Peak, Advisor to the Commissioner, Office of Commissioner Stein

Anne K. Small, General Counsel
Mr. Heslop

February 11, 2016

Page 2

Timothy Henseler, Director, Office of Legislative and Intergovernmental Affairs

John J. Nester, Director, Office of Public Affairs

Kenneth Johnson, Chief Financial Officer, Office of Financial Management

Darlene L. Pryor, Management and Program Analyst, Office of the Chief Operating 

Officer
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

Executive Summary Improvements Needed in Oversight of SECSponsored Conferences

Report No. 532 

February 11, 2016 

i 

Why We Did This Audit

Executive Order 13589, Promoting 

Efficient Spending, (November 2011) 

directs Federal agencies to cut waste in 

Federal Government spending and 

identify opportunities to promote efficient 

and effective spending, including 

spending on conferences. Office of 

Management and Budget Memorandum 

M-12-12, Promoting Efficient Spending to 

Support Agency Operations, (May 2012) 

describes policies and practices to 

achieve these efficiencies and requires 

Federal agencies to exercise discretion 

and judgment in ensuring conference 

expenses are appropriate, necessary, 

and managed in a manner that minimizes 

expense to taxpayers. The U.S. 

Securities and Exchange Commission’s 

(SEC or agency) Office of Financial 

Management (OFM) is responsible for 

overseeing SEC conferences. Between 

October 1, 2013, and May 31, 2015 (the 

period reviewed), the SEC sponsored 

145 conferences costing more than

$2.22 million. Internal controls over 

SEC-sponsored conferences, including 

the review and approval of conference 

spending, must be sufficiently designed 

and implemented to ensure the SEC’s 

conference spending is reasonable and 

necessary and complies with applicable 

Federal and agency requirements.

What We Found

To determine whether the SEC complied with Federal and agency 

requirements for planning, requesting, approving, and reporting 

agency-sponsored conferences, we reviewed information including but 

not limited to: (1) SEC conference reporting and spending data for the 

period reviewed, (2) OFM’s role and responsibilities for overseeing 

SEC-sponsored conferences, and (3) SEC divisions’ and offices’ roles 

and responsibilities related to agency conferences. We found that 

OFM established policies and procedures for planning, requesting, and 

approving SEC-sponsored conferences. OFM also properly reported 

to the Office of Inspector General all conferences held between 

October 1, 2013, and May 31, 2015, costing more than $20,000, in

accordance with the Consolidated Appropriations Act, 2014 (Pub. L. 

113-76) and the Consolidated and Further Continuing Appropriations 

Act, 2015 (Pub. L. 113-235). In addition, in October 2014, OFM 

improved the SEC’s conference request process by implementing the 

Automated Conference Request System. The system facilitates the 

electronic submission of conference requests, documents conference 

review and approval processes, and provides online conference 

request tracking.

However, we determined that OFM can further improve its oversight of 

agency-sponsored conferences. Specifically, in fiscal year 2014, OFM 

did not obtain from divisions and offices actual expenses for SEC 

conferences costing more than $100,000 and instead relied on 

estimates. As a result, the SEC reported to the Office of Inspector 

General and the public inaccurate fiscal year 2014 conference 

spending information (overstated by $19,103), and did not fully comply 

with the Consolidated Appropriations Act of 2014 and Office of 

Management and Budget Memorandum M-12-12. 

Furthermore, although not required to do so, OFM did not review 

actual expenses for conferences costing equal to or less than 

$100,000. Expenses for these conferences composed 83 percent of 

the SEC’s total conference-related expenses during the period 

reviewed. Because OFM does not review actual expenses for these 

conferences, the SEC lacks sufficient controls to ensure the majority of 

funds spent on conferences are used appropriately and in accordance 

with Federal and agency requirements. 

In addition, OFM did not fully define and communicate to divisions and 

offices those events that meet the definition of “conference.” As a 

result, divisions and offices may not accurately and timely report 

conferences as required. 

Finally, as a result of not having a documented, standardized process 

for reviewing conference request packages, OFM approved SECsponsored conferences without obtaining all required information. 

What We Recommended

To improve OFM’s oversight of SECsponsored conferences, we made six 

recommendations for corrective action. 

The recommendations address 

improvements in reviewing and reporting 

conference expenses, amending the 

SEC’s definition of “conference,” and 

strengthening OFM’s review of 

conference request packages. 

Management concurred with the 

recommendations, which are resolved 

and closed for reporting purposes based 

upon our verification of management’s 

completed corrective actions. For additional information, contact the Office of Inspector General at 

(202) 551-6061 or www.sec.gov/about/offices/inspector_general.shtml.
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 532 ii FEBRUARY 11, 2016

TABLE OF CONTENTS

Executive Summary .....................................................................................................i

Background and Objectives....................................................................................... 1 

Background ................................................................................................................. 1 

Objectives .................................................................................................................... 3 

Results ........................................................................................................................ 4 

Finding 1: OFM Did Not Obtain or Review Actual Conference Expenses .................... 4 

Recommendations, Management’s Response, and Evaluation of Management’s 

Response ............................................................................................................... 6 

Finding 2: OFM Should Clarify SEC-Sponsored Conference Reporting 

Requirements ......................................................................................................... 8 

Recommendations, Management’s Response, and Evaluation of Management’s 

Response ............................................................................................................... 9 

Finding 3: OFM Should Establish a Standardized Process for Reviewing Conference 

Requests .............................................................................................................. 11 

Recommendations, Management’s Response, and Evaluation of Management’s 

Response ............................................................................................................. 11 

Figures and Tables

Figure 1. Actual Conference Expenses Between October 1, 2013, and May 31, 2015 – 

Reviewed Versus Not Reviewed............................................................................. 6 

Table 1. Differences in Events Reported to OIG and OFM .......................................... 9 

Appendices 

Appendix I. Scope and Methodology ......................................................................... 13 

Appendix II. Sampled Conferences .......................................................................... 16 

Appendix III. Management Comments....................................................................... 18 
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 532 iii FEBRUARY 11, 2016

ABBREVIATIONS

ACRS Automated Conference Request System

FY fiscal year

GAO U.S. Government Accountability Office

OCIE Office of Compliance Inspections and Examinations

OFM Office of Financial Management

OIG Office of Inspector General

OMB Office of Management and Budget

SEC or agency U.S. Securities and Exchange Commission

SECR SEC Administrative Regulation

Appropriations Acts Consolidated Appropriations Act, 2014 (Pub. L. 113- 

of 2014 and 2015 or the Acts 76), and Consolidated and Further Continuing 

Appropriations Act, 2015 (Pub. L. 113-235)

 
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 532 1 FEBRUARY 11, 2016

Background and Objectives

Background 

Like other Federal agencies, the U.S. Securities and Exchange Commission (SEC or 

agency) sponsors conferences and approves SEC employees’ attendance at 

conferences. According to the Federal Travel Regulation, Office of Management and 

Budget (OMB) guidance, and SEC policy, “conference” is defined as “[a] meeting, 

retreat, seminar, symposium or event that involves attendee travel. The term 

'conference' also applies to training activities that are considered to be conferences 

under 5 CFR 410.404.”

1

 Between October 1, 2013, and May 31, 2015, the SEC 

sponsored 145 conferences costing more than $2.22 million. These conferences 

included but were not limited to new examiner training for the SEC’s Office of 

Compliance Inspections and Examinations (OCIE), national trial lawyers training held by 

the agency’s Division of Enforcement, annual regional securities conferences, and 

various leadership conferences. 

Executive Order 13589, Promoting Efficient Spending, (dated November 9, 2011) 

directs Federal agencies to cut waste in Federal Government spending and identify 

opportunities to promote efficient and effective spending, including spending on 

conferences. On May 11, 2012, OMB issued Memorandum M-12-12, Promoting 

Efficient Spending to Support Agency Operations, (OMB M-12-12) to implement the 

Executive Order. OMB M-12-12 describes policies and practices to achieve efficiencies 

and, among other things, requires Federal agencies to exercise discretion and judgment 

in ensuring conference expenses are appropriate, necessary, and managed in a 

manner that minimizes expense to taxpayers.2

 For example, OMB M-12-12 directs 

agencies to require the approval of senior officials for conferences with expenses more 

than $100,000, prohibits conferences with expenses of more than $500,000 (unless the 

agency’s head provides a waiver), and increases transparency by requiring the 

reporting of these costs publicly.

 

1 41 CFR 300-3.1; OMB Memorandum M-12-12, Promoting Efficient Spending to Support Agency 

Operations, May 11, 2012; and SEC Administrative Regulation 5-4, Conference Authorization, 

November 18, 2013. 

2 According to OMB M-12-12, “conference expenses” are defined as all direct and indirect conference 

costs paid by the Government, whether paid directly by agencies or reimbursed by agencies to travelers 

or others associated with the conference, but do not include funds paid under Federal grants to grantees. 

Conference expenses include any associated authorized travel and per diem expenses, hire of rooms for 

official business, audiovisual use, light refreshments, registration fees, ground transportation, and other 

expenses as defined by the Federal Travel Regulation. See 41 CFR 301-74.2. Moreover, conference 

expenses should be net of any fees or revenue received by the agency through the conference and 

should not include costs to ensure the safety of attending governmental officials.
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 532 2 FEBRUARY 11, 2016

In addition, the Appropriations Acts of 20143 and 20154 (the Acts) required Federal 

agencies to report to their Inspector General:

1. conferences costing more than $20,000 within 15 days of each conference; and

2. expenditures for conferences costing more than $100,000 in an annual report.

Moreover, the Acts directed agencies to comply with OMB M-12-12 when using funds 

received for travel or conference activities. 

The SEC’s Office of Financial Management (OFM) is responsible for overseeing the 

agency’s conference activities. Specifically, as detailed in SEC Administrative 

Regulation (SECR) 5-4, Conference Authorizations,

5 OFM provides technical expertise 

on all matters pertaining to conference planning requirements, issues guidance, and 

authorizes SEC-sponsored conferences that involve the expenditure of funds. OFM

also compiles the costs of SEC conferences costing more than $100,000 and submits 

agency conference reports to the Office of Inspector General (OIG) and the public. 

In July 2013, as part of its conference oversight role, OFM issued Chapter 06.08 of the 

OFM Reference Guide.6

 Chapter 06.08 outlines the SEC’s requirements for conference 

and expenditure approval. Any SEC-sponsored conference, training conference, 

international meeting, awards ceremony, or cultural awareness program event requires 

OFM approval. Furthermore, Chapter 06.08 provides instructions regarding meals and 

refreshments, hotel rooms, and the use of facilities. The Chapter mandates that the 

SEC’s divisions and offices make every possible effort to use SEC space to minimize 

costs. If SEC space is not used, divisions and offices must submit an explanation to 

OFM. Divisions and offices must also submit three quotes for rental costs projected to 

exceed $1,000, and complete and submit to the Office of Acquisitions a procurement 

package for facility rentals projected to exceed $3,000. Hotel rooms and conferenceprovided meal expenses require special research and approval, and OFM is responsible 

for approving these expenditures. Also, divisions and offices must conduct market 

research for estimated meal and refreshment costs in excess of $1,000 and provide at 

least three potential sources. Additionally, lodging and conference-provided meals 

should not exceed the Federal Travel Regulation rates. 

SECR 5-4 further outlines the policies, requirements, and responsibilities for planning 

and approving SEC-sponsored conferences. Specifically, the regulation states that 

SEC-sponsored conferences must be planned in a manner that ensures proposed 

 

3 Section 742 of the Consolidated Appropriations Act, 2014, Pub. L. 113-76, Division E, Title VII, § 742, 

128 Stat. 5, 242-43 (2014).

4 Section 739 of the Consolidated and Further Continuing Appropriations Act, 2015, Pub. L. 113-235, 

Division E, Title VII, § 739, 128 Stat. 2130, 2389-90 (2014).

5 SECR 5-4, Conference Authorization, November 18, 2013. 

6 SEC OFM Reference Guide, Chapter 06.08, Budget Execution: SEC Conference Planning and 

Approval, Effective October 2014. In April 2015, OFM amended paragraphs 3.1.2, 4.1.1, and 4.2.5. 
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 532 3 FEBRUARY 11, 2016

expenditures are reasonable and necessary and that benefits derived by the agency 

exceed the costs incurred. 

In October 2014, OFM replaced the manual process divisions and offices used to 

request conferences by implementing the Automated Conference Request System 

(ACRS). ACRS is a SharePoint application that acts as a document repository to

facilitate the electronic submission of conference requests. ACRS also documents the 

review and approval processes, provides on-line request tracking, and guides division 

and office requestors through the steps to request a conference. 

Objectives 

Our objectives were to determine whether the SEC: 

• complied with applicable requirements of the Appropriations Acts of 2014 and 

2015; and

• adhered to internal guidance on minimizing conference costs during the period of 

October 2013 through May 2015 to ensure all expenses were reasonable and 

necessary.

We determined that OFM properly notified the OIG of conferences costing more than

$20,000. However, as this report describes, improvements are needed in the oversight 

of SEC-sponsored conferences.

Appendix I includes additional information on our scope and methodology; applicable 

Federal laws and regulations, and SEC regulations, policies, and procedures; our 

review of internal controls; and prior audit coverage. Appendix II includes the 

conferences we reviewed. 
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 532 4 FEBRUARY 11, 2016

Results

Finding 1: OFM Did Not Obtain or Review Actual Conference 

Expenses 

SEC divisions and offices are responsible for preparing conference request 

packages and submitting them to OFM for approval. Furthermore, divisions and 

offices are responsible for collecting and submitting documentation of 

conference expenses. However, OFM is responsible for ensuring that the 

SEC’s conference spending is reasonable and necessary and complies with 

applicable Federal and agency guidance. Although OFM established agency 

policies, requirements, and responsibilities for planning, requesting, and 

approving SEC-sponsored conferences, OFM did not obtain or review actual 

conference expenses. Specifically: 

(1) OFM did not obtain actual expenses for conferences costing more than

$100,000 in fiscal year (FY) 2014, as required by the Appropriations Act 

of 2014 and OMB M-12-12. Instead, even though OFM requested actual 

expenses from divisions and offices, OFM received and improperly relied 

on estimates of conference expenses to generate the SEC’s FY 2014 

report for conferences exceeding $100,000. As a result, in FY 2014, the 

SEC reported inaccurate conference spending information to the OIG and 

the public and did not fully comply with the Appropriations Act of 2014

and OMB M-12-12. 

(2) OFM did not review actual expenses for conferences costing equal to or 

less than $100,000 as part of its oversight role. We recognize that there 

was no requirement to do so and that OFM’s review of such expenses 

would be time-intensive. However, 83 percent (or $1.85 million of 

$2.22 million) of the SEC’s conference expenses between October 1, 

2013, and May 31, 2015, were for conferences costing equal to or less 

than $100,000. Because OFM did not review any of these actual 

expenses, the SEC lacks sufficient controls to ensure the majority of 

funds spent on agency-sponsored conferences are reasonable, 

necessary, and in accordance with agency guidance. 

OFM Did Not Obtain Actual Expenses for Conferences Costing More Than

$100,000. The Appropriations Act of 2014 required the SEC to report to the OIG the 

detailed expenses for conferences costing more than $100,000. Furthermore, 

OMB M-12-12 requires the SEC to report publicly all previous fiscal year agencysponsored conferences with a net expense of more than $100,000 by January 31 each 

year. OFM is responsible for obtaining and compiling the actual expenses from the 

divisions and offices for these reports. 
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 532 5 FEBRUARY 11, 2016

In FY 2014, the SEC sponsored only two conferences with expenses greater than 

$100,000: (1) the Division of Enforcement 2014 Chief Enforcement Conference, and 

(2) the 2014 OCIE National Exam Program Leadership Conference. For both 

conferences, OFM requested actual expenses from the division and the office that held 

the conferences, but OFM received only estimates. OFM relied on these estimates to 

report conference expenses to the OIG and the public. Additionally, the Division of 

Enforcement and OCIE did not ensure that all attendee travel was included when 

calculating travel expenses associated with the conferences.7

As a result, the SEC’s FY 2014 conference reports to the OIG and the public were

inaccurate. Specifically, the SEC reported to the OIG and the public that expenses

associated with the Division of Enforcement 2014 Chief Enforcement Conference were 

$195,116 when actual expenses were $171,914 (a $23,202 overstatement).8 The SEC 

reported to the OIG and the public that expenses associated with the 2014 OCIE

National Exam Program Leadership Conference were $176,219 when actual expenses 

were $180,318 (a $4,099 understatement). In total, these errors resulted in a $19,103

overstatement of SEC conference expenses in FY 2014. Because the SEC’s reports 

were inaccurate, the reports did not fully comply with the requirements of the 

Appropriations Act of 2014 and OMB M-12-12. OFM officials told us they will ensure 

that actual expenses are reported in future annual reports. 

OFM Did Not Obtain or Review Actual Expenses for Conferences Costing Equal to 

or Less Than $100,000. We determined that OFM did not obtain or review actual 

expenses for conferences costing equal to or less than $100,000 as part of its oversight 

role. According to an OFM official, reviewing such expenses is time-intensive. 

Additionally, there is no Federal law, regulation, or agency policy that requires review of 

actual expenses for conferences costing equal to or less than $100,000. However, 

SECR 5-4 outlines policies, requirements, and procedures for planning and approving 

conferences and gives OFM responsibility for providing technical expertise, issuing 

guidance, and authorizing conference expenses. The regulation further states that 

SEC-sponsored conferences must be planned in a manner that ensures expenditures 

are reasonable and necessary and benefits derived by the agency exceed the costs 

incurred. In addition, Chapter 06.08 of the OFM Reference Guide establishes detailed 

procedures to ensure conference spending is reviewed and controlled. 

The majority of the SEC’s conference expenses are for conferences costing less than 

$100,000. For example, between October 1, 2013, and May 31, 2015, the SEC 

 

7 OFM officials told us that this occurred under the manual conference reporting process and the SEC’s 

implementation of ACRS should ensure that this does not occur in the future. 

8 We calculated actual expenses by summing attendees’ total travel voucher amounts and the costs of 

meals and refreshments for the conference. However, some travel attendees had multiple travel 

purposes combined into one travel voucher. OFM did not deem it cost effective to calculate the actual 

costs associated with each conference by breaking apart each travel voucher to identify the actual travel 

costs associated with each conference. Therefore, the amount of reported costs would be reduced if 

travel costs associated with other purposes were separated from conference travel costs. 
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 532 6 FEBRUARY 11, 2016

sponsored 145 conferences totaling $2.22 million. Only two of these conferences 

exceeded $100,000. Therefore, as shown in Figure 1, 83 percent (or $1.85 million of 

$2.22 million) of the SEC’s conference-related expenses during the period reviewed 

were for conferences costing equal to or less than $100,000. Because OFM does not 

review actual expenses for most SEC-sponsored conferences, the SEC lacks sufficient 

controls to ensure the majority of funds spent on conferences are used appropriately 

and in accordance with agency guidance (that is, expenses are reasonable and

necessary, and benefits derived exceed the costs incurred). 

We obtained and reviewed actual expenses for a sample of 15 conferences held during 

the period reviewed, and determined that 3 (or 20 percent) exceeded their approved 

budget. One conference exceeded its approved budget by $7,956 ($67,889 [actual 

expense] – $59,933 [estimated expense] = $7,956). However, OFM was unaware of 

these differences because it did not have internal controls to review actual expenses for 

conferences costing equal to or less than $100,000. 

Figure 1. Actual Conference Expenses Between October 1, 2013, and 

May 31, 2015 – Reviewed Versus Not Reviewed

$370,000 

17%

$1,850,000 

83%

Source: OIG-generated from conference spending data provided by 

OFM. 

Recommendations, Management’s Response, and Evaluation of 

Management’s Response 

To improve the SEC’s internal controls over conference spending and ensure 

compliance with applicable laws and agency policies and procedures, we recommend:

Recommendation 1: The Office of Financial Management should correct the U.S 

Securities and Exchange Commission’s fiscal year 2014 reports for conferences costing 

more than $100,000 by properly reflecting actual conference costs rather than 

estimates, and reissue the reports to the Office of Inspector General and the public.

Management’s Response. The Office of Financial Management concurred with the 

recommendation. The Office of Financial Management revised the agency’s fiscal 

year 2014 reports, provided a revised report to the Office of Inspector General, and 

posted a revised report to the agency’s website on February 1, 2016.

Reviewed

Not Reviewed
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 532 7 FEBRUARY 11, 2016

OIG’s Evaluation of Management’s Response. Management’s completed action

is responsive; therefore, the recommendation is resolved and closed for reporting 

purposes based on our verification of management’s completed corrective action. 

Recommendation 2: The Office of Financial Management should update agency

policy to require divisions and offices to (a) upload in the Automated Conference 

Request System documentation of all nontravel expenses and a list of conference 

attendees for all approved conferences, and (b) provide a justification when total 

conference costs increase by an amount determined by management.

Management’s Response. The Office of Financial Management concurred with the 

recommendation. On January 29, 2016, the Chief Financial Officer sent an e-mail 

informing all divisions and offices of the requirement to provide in the Automated 

Conference Request System (1) actual costs for all conferences, and (2) a 

justification for costs that exceed the approved estimate by 5 percent or more. 

OIG’s Evaluation of Management’s Response. We noted that the Chief Financial 

Officer’s e-mail included a memorandum to managing executives, business 

managers, and administrative contacts directing them to provide actual costs 

incurred for conferences completed since October 2015 and for all future 

conferences. The memorandum also stated that, effective immediately, all divisions 

and offices must provide a justification for actual costs that are 5 percent or more 

above approved estimates. Management’s completed action is responsive; 

therefore, the recommendation is resolved and closed for reporting purposes based 

on our verification of management’s completed corrective action. 

Recommendation 3: The Office of Financial Management should establish a process 

for periodically reconciling estimated expenses to actual expenses for a percentage (to 

be determined by management) of agency-sponsored conferences costing equal to or 

less than $100,000. 

Management’s Response. The Office of Financial Management concurred with the 

recommendation. On January 29, 2016, the Chief Financial Officer sent an e-mail 

informing all divisions and offices of the requirement to provide in the Automated 

Conference Request System documentation of actual costs for all conferences. The 

Office of Financial Management also instructed staff in its Budget Execution Branch 

to reconcile this documentation to the actual costs reported by divisions and offices.

OIG’s Evaluation of Management’s Response. We noted that the Chief Financial 

Officer’s e-mail included a memorandum to managing executives, business 

managers, and administrative contacts directing them to provide actual costs 

incurred for conferences completed since October 2015 and for all future 

conferences. On January 27, 2016, the Assistant Director, Planning and Budget 

Office, Office of Financial Management instructed Budget Execution Branch staff to 

reconcile this documentation to reported costs. Management’s completed action is 

responsive; therefore, the recommendation is resolved and closed for reporting 

purposes based on our verification of management’s completed corrective action. 
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 532 8 FEBRUARY 11, 2016

Finding 2: OFM Should Clarify SEC-Sponsored Conference 

Reporting Requirements 

We randomly selected 5 of the SEC’s 39 divisions and offices (including regional 

offices) and asked their management to provide a list of events held between 

October 1, 2013, and May 31, 2015, that met the SEC’s definition of an agencysponsored conference. Two of the five selected organizations provided lists of 

events that did not match the SEC-sponsored conferences that the organizations

reported to OFM during the same period. This occurred because OFM did not 

fully define and communicate to SEC divisions and offices what constitutes an 

SEC-sponsored conference. As a result, OFM lacks sufficient controls to ensure 

that divisions and offices are accurately and timely reporting all SEC-sponsored 

conferences as required.

Conference Information Reported to the OIG Did Not Match Information Reported 

to OFM. SECR 5-4 outlines policies, requirements, and procedures for planning and 

approving SEC-sponsored conferences. Section 5 of the document defines

“conference” in the same manner as OMB M-12-12. Specifically, SECR 5-4 states: 

For purposes of this policy, conference means a meeting, retreat, seminar, 

symposium or event that involves attendee travel. This term also includes 

training activities that are considered to be conferences under 5 CFR 

410.404.

Additionally, Section 6c of SECR 5-4 gives OFM responsibility for providing technical 

expertise, issuing guidance, and authorizing expenses related to SEC-sponsored

conferences. OFM Reference Guide, Chapter 06.08 establishes detailed procedures to 

implement SECR 5-4 and to ensure that the SEC reviews and controls its conference 

spending. Paragraph 3.1 of Chapter 06.08 outlines specific events that require 

approval.

We randomly selected 5 of the SEC’s 39 divisions and offices and, using the SEC’s 

definition of an SEC-sponsored conference, asked the selected organizations to 

provide a list of events held between October 1, 2013, and May 31, 2015, that qualified 

as SEC-sponsored conferences. As Table 1 shows, two of the five organizations

provided lists of events that did not match the SEC-sponsored conferences that the 

organizations reported to OFM during the same period. For example, the Division of 

Investment Management reported to the OIG that it held 280 events that matched the 

SEC’s definition of an agency-sponsored conference. However, the Division reported 

only two of these events to OFM. 

This occurred because OFM did not fully define or communicate to divisions and offices 

what constitutes an SEC-sponsored conference within its guidance and training 

materials. Specifically, OFM did not communicate that operational meetings and 

classroom training are not considered agency-sponsored conferences. Finally, OFM 

training materials did not sufficiently describe which events do and do not need to be 

reported in ACRS as SEC-sponsored conferences.
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 532 9 FEBRUARY 11, 2016

Table 1. Differences in Events Reported to OIG and OFM

Selected SEC Organizations Events Reported 

to OIG

Events Reported 

to OFM Difference

Division of Investment Management 280 2 278

Office of the Ethics Counsel 0 0 0 

Office of Human Resources 293 3 290

Office of Public Affairs 0 0 0 

Los Angeles Regional Office 1 1 0 

Source: OIG-generated based on information from selected divisions and offices. 

Recommendations, Management’s Response, and Evaluation of 

Management’s Response 

To ensure SEC divisions and offices understand what constitutes an SEC-sponsored 

conference and accurately and timely report conferences to OFM as required, we 

recommend:

Recommendation 4: The Office of Financial Management should update its guidance 

and training materials to amend the definition of “conference” by clarifying that 

operational meetings and classroom training are not considered SEC-sponsored

conferences and do not need to be reported in the Automated Conference Request 

System. 

Management’s Response. The Office of Financial Management concurred with the 

recommendation. On January 29, 2016, the Chief Financial Officer sent an e-mail 

informing all divisions and offices of the revised definition of “conference.”

OIG’s Evaluation of Management’s Response. We noted that the Chief Financial 

Officer’s e-mail contained a memorandum that amended the applicable agency 

administrative regulation (SECR 5-4, Conference Authorizations). The 

memorandum indicated that the Office of Financial Management will incorporate the 

revisions in a forthcoming update to the administrative regulation. Management’s 

completed action is responsive; therefore, the recommendation is resolved and 

closed for reporting purposes based on our verification of management’s completed 

corrective action. 

Recommendation 5: The Office of Financial Management should communicate to all 

divisions and offices the amended definition of “conference” so that all divisions and 

offices are aware of and understand the updated definition and what events do and do 

not need to be reported to the Office of Financial Management for approval within the 

Automated Conference Request System. 

Management’s Response. The Office of Financial Management concurred with the 

recommendation. On January 29, 2016, the Chief Financial Officer sent an e-mail 

informing all divisions and offices of the revised definition of “conference.”
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 532 10 FEBRUARY 11, 2016

OIG’s Evaluation of Management’s Response. We noted that the Chief Financial 

Officer’s e-mail included a memorandum that provided an expanded definition of 

“conference,” including events not considered conferences. Management’s 

completed action is responsive; therefore, the recommendation is resolved and 

closed for reporting purposes based on our verification of management’s completed 

corrective action.
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 532 11 FEBRUARY 11, 2016

Finding 3: OFM Should Establish a Standardized Process for 

Reviewing Conference Requests 

Based on our review of a sample of SEC-sponsored conferences held during the 

period reviewed, we determined that OFM approved conferences without 

obtaining all required information. This occurred because OFM did not have a 

documented, standardized process for reviewing conference request packages. 

As a result, the SEC lacks sufficient controls to ensure it is minimizing 

conference costs, and that conference-related expenses are reasonable and 

necessary, as required by agency guidance.

OFM Reference Guide, Chapter 06.08 outlines requirements for requesting conference 

approval. These requirements include obtaining division head, office head, or regional 

director approval; obtaining three quotes for hotel expenses costing more than $3,000; 

obtaining three quotes for facility, meal, and refreshment expenses costing more than

$1,000; maintaining hotel and meal and refreshment costs below per diem rates; and 

obtaining SEC University approval of outside speakers.

We randomly sampled 42 of the SEC’s 145 sponsored conferences held between 

October 1, 2013, and May 31, 2015, and found that OFM approved 27 (or 64 percent) 

of the sampled conferences without obtaining all required information. For example, 

OFM approved 19 conferences without obtaining the required division head, office 

head, or regional director approval. OFM also approved 14 conferences based on

incorrect per diem amounts or missing documentation such as missing quotes for 

lodging, meals, or refreshments. 

This occurred because OFM did not have a documented, standardized process for 

reviewing conference request packages. The budget analysts who reviewed

conference request packages before submitting the packages to the OFM Assistant 

Director – Planning and Budget, Chief Financial Officer, and/or Chief Operating Officer 

for approval9 did not identify the missing or inaccurate information. Without obtaining 

all required information before approving SEC-sponsored conferences, the SEC lacks 

sufficient controls to ensure it is minimizing conference costs and ensuring that 

conference-related expenses are reasonable and necessary, and that benefits derived 

by the agency exceed the costs incurred.

Recommendations, Management’s Response, and Evaluation of 

Management’s Response 

To improve OFM’s processes and procedures for approving SEC-sponsored 

conferences and ensuring approval is based on all required information, we 

recommend:

 

9 The total estimated cost of the conference dictates who the approving official will be. 
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 532 12 FEBRUARY 11, 2016

Recommendation 6: The Office of Financial Management should establish a 

documented, standardized process for reviewing conference request packages, and 

ensure divisions and offices include in request packages all required documentation, 

including quotes for lodging, facilities, meals, and refreshments. 

Management’s Response. The Office of Financial Management concurred with the 

recommendation. On January 25, 2016, the Assistant Director, Planning and 

Budget Office, Office of Financial Management sent an e-mail to staff in the Office of 

Financial Management’s Budget Execution Branch establishing a process for 

reviewing conference request packages. 

OIG’s Evaluation of Management’s Response. We noted that the Assistant 

Director’s e-mail included a checklist entitled SEC Conference Request Check Off 

Sheet. Staff in the Budget Execution Branch will use the checklist to verify that 

conference request packages are complete. Effective January 25, 2016, the 

Assistant Director required that all requests in the Automated Conference Request 

System include the checklist. The Assistant Director described the checklist as an 

interim step until the Office of Financial Management can work with the Office of 

Information Technology to modify the Automated Conference Request System and 

capture verifications internally. Management’s completed action is responsive; 

therefore, the recommendation is resolved and closed for reporting purposes based 

on our verification of management’s completed corrective action. 
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 532 13 FEBRUARY 11, 2016

Appendix I. Scope and Methodology

We conducted this performance audit from June 2015 through February 2016 in 

accordance with generally accepted government auditing standards. Those standards 

require that we plan and perform the audit to obtain sufficient, appropriate evidence to 

provide a reasonable basis for our findings and conclusions based on our audit 

objectives. We believe that the evidence obtained provides a reasonable basis for our 

findings and conclusions based on our audit objectives. 

Scope and Methodology. To address our audit objectives, we obtained and reviewed 

the following information for the period reviewed (the period between October 1, 2013, 

and May 31, 2015): (1) request packages for a sample of SEC-sponsored conferences, 

(2) conference cost data, (3) SEC memorandums to the OIG for conferences costing 

more than $20,000, and (4) SEC reports to the OIG and the public for conferences 

costing more than $100,000. We also:

• reviewed applicable Federal laws and regulations, and the SEC’s policies and 

procedures for reviewing and approving conference requests and costs; 

• interviewed OFM personnel to understand OFM’s role in overseeing SECsponsored conferences; 

• reviewed lists of events meeting the SEC’s definition of a conference from a 

sample of divisions and offices to determine whether divisions and offices are 

accurately and completely reporting conferences to OFM; and

• reviewed supporting documentation for a sample of SEC-sponsored conferences 

to determine whether the SEC’s oversight of such events complied with 

applicable Federal laws, regulations, and policies, and procedures.

The Federal laws, regulations, policies, and procedures we reviewed included: 

Federal Laws and Regulations:

• Consolidated and Further Continuing Appropriations Act, 2013, Pub. L. 113-6,

Division G, § 3003, 127 Stat. 198, 435-36 (2013). 

• Consolidated Appropriations Act, 2014, Pub. L. 113-76, Division E, Title VII, 

§ 742, 128 Stat. 5, 242-43 (2014).

• Consolidated and Further Continuing Appropriations Act, 2015, Pub. L. 113-235, 

Division E, Title VII, § 739, 128 Stat. 2130, 2389-90 (2014).

• Executive Order 13589, Promoting Efficient Spending, November 9, 2011.

• OMB Memorandum M-12-12, Promoting Efficient Spending to Support Agency 

Operations, May 11, 2012.
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 532 14 FEBRUARY 11, 2016

SEC Administrative Regulations, Policies, and Procedures:

• SECR 5-4, Conference Authorization, November 18, 2013.

• SECR 5-12, Process for Obtaining Approval for Outside Speakers, Trainers, or 

Presenters, October 17, 2012.

• OFM Reference Guide, Chapter 06.08, SEC Conference Planning and Approval, 

October 2014.

• OFM Reference Guide, Chapter 06.08.R01, Amendment to SEC Conference 

Planning and Approval, April 2015.

Internal Controls. During our audit, we reviewed the SEC’s internal controls related to 

SEC-sponsored conferences. Specifically, we considered the control environment, risk 

assessment, and control activities for reviewing and approving agency-sponsored 

conferences. As noted in this report, we identified internal control weaknesses related 

to the review and approval of SEC-sponsored conferences that impact the SEC’s ability 

to (1) effectively review conference request packages, (2) reasonably assure all 

conferences are reported for review and approval, and (3) ensure conference spending 

is reasonable and necessary and complies with applicable Federal and agency 

guidance. Our recommendations, if implemented, should correct the weaknesses 

identified. 

Computer-Processed Data. The U.S Government Accountability Office’s (GAO) 

Assessing the Reliability of Computer-Processed Data (GAO-09-680G, July 2009) 

states that “data reliability refers to the accuracy and completeness of computerprocessed data, given the uses they are intended for. Computer-processed data may 

be data (1) entered into a computer system or (2) resulting from computer processing.” 

Furthermore, GAO-09-680G defines “reliability,” “completeness,” and “accuracy” as 

follows:

• “Reliability” means that data are reasonably complete and accurate, meet your 

intended purposes, and are not subject to inappropriate alteration. 

• “Completeness” refers to the extent that relevant records are present and the 

fields in each record are appropriately populated. 

• “Accuracy” refers to the extent that recorded data reflect the actual underlying 

information. 

We relied on computer-processed data from the SEC’s ACRS, FedTraveler Travel 

System, and E2 Solutions Travel System to analyze conference request packages and 

actual costs between October 1, 2013, and May 31, 2015. We performed data 

reliability, completeness, and accuracy testing, in part, by comparing estimated 

conference costs to (1) quotes from vendors, (2) the per diem rates for travel, (3) our 

own manual calculations, and (4) actual expense data. Furthermore, we compared 
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 532 15 FEBRUARY 11, 2016

system data to travel voucher supporting documentation and our own manual 

calculations to assess travel voucher accuracy. As a result of these tests, we 

determined the computer-processed data we reviewed during our audit was sufficiently 

reliable to support the audit conclusions.

Sampling. The SEC sponsored 145 conferences between October 1, 2013, and

May 31, 2015.

10 To address our audit objectives, we judgmentally selected and 

reviewed information for a sample of conferences, as further described below. Our 

sampling methodology was nonstatistical; therefore, we did not project our results and 

conclusions to the total population of SEC-sponsored conferences held during the 

period reviewed. 

To review the SEC’s conference approval processes, we selected a stratified sample of 

42 of the 145 SEC-sponsored conferences held during the period reviewed. 

Specifically, we reviewed approval documentation for all 32 conferences costing more 

than $20,000. We also randomly selected and reviewed approval documentation for 

10 conferences costing equal to or less than $20,000 and more than $250.11 

To review actual conference costs and determine whether conference spending was

reasonable, necessary, and in accordance with Federal and agency guidance, we 

selected a stratified sample of 15 conferences from the 42 conferences selected for 

review. Specifically, we reviewed actual costs for the two SEC-sponsored conferences 

costing more than $100,000. We also randomly selected and reviewed actual costs for 

seven SEC-sponsored conferences costing equal to or less than $100,000 and equal to 

or more than $20,000. Finally, we randomly selected and reviewed actual costs for six

SEC-sponsored conferences costing under $20,000 and more than $250. Appendix II 

includes the conferences we reviewed. 

Finally, to determine whether divisions and offices accurately and completely reported 

conferences to OFM, we randomly selected 5 of the SEC’s 39 divisions and offices

(including regional offices) and requested those organizations provide listings of events 

held during the period reviewed that met the SECR 5-4 definition of a conference.

Prior Coverage. During the last 5 years, the SEC OIG issued one memorandum of 

particular relevance to this audit. Unrestricted reports can be accessed over the 

Internet at http://www.sec.gov/about/offices/oig/inspector_general_audits_reports.shtml. 

• Analysis of the SEC’s Compliance with Conference Approval and Reporting 

Requirements for Fiscal Year 2014 (September 30, 2014). 

 

10 We did not review conferences held by the SEC OIG and, therefore, excluded these conferences from 

the total number of SEC-sponsored conferences held during the period reviewed. 

11 We deemed conferences costing $250 or less immaterial for the purposes of this audit. 
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 532 16 FEBRUARY 11, 2016

Appendix II. Sampled Conferences

We reviewed conference request packages, including travel estimates and quotes for 

hotels, facilities, meals, and refreshment for the 42 SEC conferences shown below. We 

reviewed actual expenses for 15 of these conferences, as indicated. 

No. Conference Name Conference Dates

Estimated 

Conference 

Cost

OIG 

Reviewed 

Actual 

Expenses

1 2014 Chief Enforcement Conference Sept. 17-19, 2014 $195,116 Yes

2 OCIE National Exam Program Leadership 

Conference July 30 – Aug. 2, 2014 176,219 Yes

3 Enforcement National Trial Lawyer Conference Sept. 11-12, 2014 98,835 Yes

4 2014 OCIE National Exam Program Training 

Conference Feb. 10-14, 2014 89,220

5 Asset Management Unit Training Conference Apr. 28-29, 2015 80,554

6 2015 New Examiner Course II Mar. 9-13, 2015 80,408

7 Enforcement Essentials New Employee 

Conference May 12-14, 2015 79,178

8 OCIE New Examiner Training Conference - 

AMENDED Nov. 3-7, 2014 78,725 Yes

9 Strategic Management of Regulatory and 

Enforcement Agencies Dec. 9-10, 2014 69,390

10 Enforcement Chief Accountant National 

Training Conference Sept. 11-12, 2014 62,095

11 Market Abuse Unit Strategic Planning and 

Training Meeting Mar. 26-28, 2014 61,470

12 Enforcement Essentials for New Employees May 12-14, 2014 59,933 Yes

13 OCIE New Examiner Training Conference June 9-13, 2014 54,332

14 Enforcement 2014 Asset Management Unit

Onsite May 1-2, 2014 54,007

15 Southeastern Securities Conference June 26-27, 2014 39,905

16 MicroCap Task Force National Training 

Conference Sept. 9-10, 2014 39,903 Yes

17 2014 OCIE Trading Risk Identification Group 

Conference July 10-11, 2014 39,544

18 2014 Enforcement Center for Risk and 

Quantitative Analysis Training Conference Oct. 1-2, 2014 39,002

19 Market Abuse Unit Insider Training Apr. 13-15, 2015 38,850

20 Trade Risk Identification Group Conference May 28-29, 2015 38,465

21 2015 Municipal Advisor Examiner Training Jan. 8-9, 2015 36,840
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 532 17 FEBRUARY 11, 2016

No. Conference Name Conference Dates

Estimated 

Conference 

Cost

OIG 

Reviewed 

Actual 

Expenses

22 Administrative Officer's Conference May 12-14, 2015 36,690

23 Municipal Securities and Pension Plan Training 

Conference May 5-6, 2015 35,780

24 Office of Technical Support Litigation Support 

Training Conference Sept. 23-25, 2014 29,029

25 38th Annual Southwest Securities Conference Aug. 19, 2014 27,605

26 Enforcement Foreign Corrupt Practices Act 

National Training Sept. 8-10, 2014 26,605 Yes

27 Municipal Securities and Public Pensions 

National Training Sept. 15-16, 2014 31,632 Yes

28 Enforcement Complex Financial Instruments 

Training Conference June 26-27, 2014 24,536

29 2015 Northwest Regulators Conference Apr. 14-15, 2015 21,539 Yes

30 SEC Advisory Committee on Small and 

Emerging Companies Mar. 4, 2015 20,977

31 2014 Northwest Regulators Conference San 

Francisco Regional Office Apr. 30 – May 1, 2014 20,696

32 OCIE 2014 Compliance Outreach National

Seminar Conference Jan. 30, 2014 20,035

33 2014 OCIE Office of Clearance and Settlement

Training Conference Feb. 25-27, 2014 19,485 Yes

34

Division of Economic and Risk Analysis Joint 

Conference with University of Maryland on 

Regulation of Financial Markets

May 16, 2014 17,880 Yes

35 Enforcement Fraud Training Conference Feb. 26-27, 2014 14,036 Yes

36 2014 Thomas A. Biolsi International Institute for 

Capital Market Compliance and Examination June 23-27, 2014 13,714 Yes

37

Chair's Town hall and Award Ceremony for 

2014 Combined Federal Campaign

Contributions

Apr. 28, 2015 6,897

38 Investor Advisory Committee Meeting Apr. 10, 2014 6,388

39 2014 OCIE Compliance Outreach ProgramNew York June 30, 2014 3,980 Yes

40 2015 OCIE Sponsored Director Awards 

New York Regional Office Apr. 29-30, 2015 3,674

41 Philadelphia Regional Office African American 

Heritage Program Event Feb. 26, 2015 356

42 European Securities and Market Authority

Conference Jan. 8, 2015 258 Yes

Source: OIG-generated based on information from OFM. 
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 532 18 FEBRUARY 11, 2016

Appendix III. Management Comments
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 532 19 FEBRUARY 11, 2016
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 532 20 FEBRUARY 11, 2016

Major Contributors to the Report

Colin Heffernan, Audit Manager

Jacob Dull, Lead Auditor

Michael Gainous, Auditor

To Report Fraud, Waste, or Abuse, Please Contact:

Web: www.reportlineweb.com/sec_oig 

Telephone: (877) 442-0854 

Fax: (202) 772-9265

Address: U.S. Securities and Exchange Commission

Office of Inspector General

100 F Street, N.E.

Washington, DC 20549

Comments and Suggestions 

If you wish to comment on the quality or usefulness of this report or suggest ideas for 

future audits, please contact Rebecca Sharek, Deputy Inspector General for Audits, 

Evaluations, and Special Projects at sharekr@sec.gov or call (202) 551-6061. 

Comments, suggestions, and requests can also be mailed to the attention of the Deputy 

Inspector General for Audits, Evaluations, and Special Projects at the address listed 

above.