Audit of the SEC’s Filing Fees 

Program 

 March 29, 2013

 Report No. 514
OFFICE OF 

INSPECTOR GENERAL. 

To: 

From: 

Subject: 

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

WASHINGTON, D.C. 2.0549 

MEMORANDUM 

March 29, 2013 

Kenneth Johnson, Chief Financial Officer, Office of Financial 

I , ~ 

c6¥.fi/fc~t r: ~spector Ge 

Man(,'!gement~/ 

Audit of the SEC's Filing Fees Program, Report No. 514 

This memorandum transmits the U.S. Securities and Exchange Commission 

(SEC), Office of Inspector General's (OIG) final report on our audit of the SEC's 

filing fees program. The audit was conducted as part of our continuous effort to 

assess management of the Commission's programs and operations and as a 

part of our annual audit plan. 

The report contains four recommendations which, if fully implemented, should 

strengthen the Office of Financial Management's (OFM) internal controls over 

filing fees policies and procedures. OFM concurred with all the 

recommendations. Your written response to the draft report is included in 

AppendixV. 

Within the next 45 days, please provide the OIG with a written corrective action 

plan that is designed to address the recommendations. The corrective action 

plan should include information such as the responsible official/point of contact, 

timeframes for completing required actions, and milestones identifying how you 

will address the recommendations. 

Audit of the SEC’s Filing Fees Program March 29, 2013

Report No. 514 

Page i 

Should you have any questions regarding this report, please do not hesitate to 

contact me. We appreciate the courtesy and cooperation you and your staff 

extended to our office. 

Attachment

cc: Elisse B. Walter, Chairman

 Erica Y. Williams, Deputy Chief of Staff, Office of the Chairman 

 Luis A. Aguilar, Commissioner

 Troy A. Paredes, Commissioner

 Daniel Gallagher, Commissioner

Jeff Heslop, Chief Operating Officer, Office of Chief of Operations 

Kay Levy, Assistant Director, Disgorgements and Operations, Office of

 Financial Management
Audit of the SEC’s Filing Fees Program March 29, 2013

Report No. 514 

Page ii

Audit of the SEC’s Filing Fees Program 

Executive Summary

Background. The U.S. Securities and Exchange Commission (SEC or 

Commission), Office of Inspector General (OIG) contracted with Williams Adley, 

an Independent Public Accountant, to conduct an audit of the SEC’s refund 

request processes and management of dormant accounts. The SEC receives 

monies through the collection of securities registration, tender offer, merger, and 

other fees (filing fees) from registrants. The SEC records the filing fees it collects 

as revenue. However, if registrants submit payments to the SEC that are in 

excess of the actual fee that is due for a filing, the SEC records the excess 

payment in the registrant’s deposit liability account until it is earned by the SEC 

for future registrant filings. The SEC returns amounts in the deposit liability 

account to the registrant if the account has not had any activity against it for three 

years, or upon request from the registrant. 

According to the fiscal years 2009 to 2011 U.S. Government Accountability 

Office’s (GAO) financial statement audits of the SEC, GAO identified amounts 

recorded in registrant’s deposit liability accounts that were not properly returned 

to registrants and amounts that were not properly recognized as revenue in the 

correct fiscal year. As a result GAO concluded that the SEC’s controls over 

registrant deposits and filing fees collectively represented a significant deficiency.

Subsequently, GAO’s fiscal year 2012 financial statement audit concluded that 

the SEC made notable progress in addressing previously reported internal 

control deficiencies. As a result of the SEC’s increased controls and significant 

efforts to review and return amounts in dormant registrant accounts, as of 

September 30, 2012, GAO no longer considered the remaining control 

deficiencies in this area, individually or collectively, as a significant deficiency. 

Objectives. Williams Adley’s overall audit objectives were to determine whether 

(1) OFM had developed written policies and standard operating procedures 

covering oversight of the filing fees program; (2) filing fees staff are adequately 

trained and have the requisite skills needed to carry out their duties and 

responsibilities; (3) the EDGAR Momentum system used to track filing fees 

refund requests is appropriate; (4) filing fees backlogs and dormant accounts are 

properly administered and managed; and (5) filing fees refunds are disbursed by 

Treasury to the appropriate registrants as requested.

Results. Williams Adley identified areas where the SEC can strengthen its 

internal controls over the office’s current filing fees policies and procedures. 

Specifically, the audit found that OFM needs to strengthen its guide, OFM 
Page iii

Audit of the SEC’s Filing Fees Program March 29, 2013

Report No. 514 

Reference Guide, Chapter 80.03, Filing Fee Revenue, August 2012, in the area 

of filing fees. During our system walk through, we found that OFM does not have 

a process for confirming registrant bank information. As a result, there is a risk 

for unauthorized requests for refunds. In addition, the office needs to strengthen 

its policies and procedures related to clearing cancelled refund checks to ensure 

a reasonable timeline is established. The lack of a reasonable timeline could 

delay refunding registrant refunds.

Further, the SEC needs to complete an analysis of older filing fee registrant 

transactions to ensure revenue is properly recognized in its financial reports. 

OFM has begun reviewing non-dormant registrant accounts, based on the 

expected costs and benefits for each account. However, OFM’s review of nondormant registrant accounts has not been fully completed. Completing this task 

would strengthen its internal controls over matching revenues to expenses in its 

financial reports.

Summary of Recommendations. Based on the results of our audit we 

recommended that within its budget constraints, the OFM should modify EDGAR 

usage to prevent unauthorized requests for refunds. We also recommended

OFM implement a policy that includes a definitive and reasonable timeline for 

reconciling cancelled refund transactions. In addition, OFM should complete its 

review of non-dormant registrant accounts based on the cost-benefit analysis the 

office has devised. 

Management’s Response to the Report’s Recommendations. OIG provided 

OFM with the formal draft report on March 20, 2013. OFM concurred with all 

recommendations in this report. OIG considers the report recommendations 

resolved. However, the recommendations will remain open until documentation 

is provided to OIG that supports each recommendation has been fully 

implemented. 

OFM’s response to each recommendation and OIG’s analysis of their responses 

are presented after each recommendation in the body of this report.
Audit of the SEC’s Filing Fees Program March 29, 2013

Report No. 514 

Page iv

TABLE OF CONTENTS 

Executive Summary......................................................................................................iii 

Table of Contents ......................................................................................................... v 

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

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

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

Findings and Recommendations.......................................................................... 4 

Finding 1: Filing Fees Policies and Procedures Can be Improved....................4 

Recommendation 1....................................................................... 6 

Recommendation 2....................................................................... 6 

Recommendation 3....................................................................... 6 

Finding 2: Review Procedures over Registrant Deposit Accounts Should 

be Completed..................................................................................................... 7 

Recommendation 4 ....................................................................... 8 

Appendices 

Appendix I: Abbreviations................................................................................10

Appendix II: Scope and Methodology...............................................................11

Appendix III: Criteria......................................................................................... 13 

Appendix IV: List of Recommendations ........................................................... 14 

Appendix V: Management Comments.............................................................. 15 
Audit of the SEC’s Filing Fees Program March 29, 2013

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Background and Objectives 

Background 

The U.S. Securities and Exchange Commission (SEC or Commission), Office of 

Inspector General (OIG) contracted with Williams Adley, an Independent Public 

Accountant, to conduct an audit of the SEC’s refund request processes and 

management of dormant accounts. The SEC receives monies through the 

collection of securities registration, tender offer, merger, and other fees (filing 

fees) from registrants. The SEC records the filing fees it collects as revenue. 

However, if registrants submit payments to the SEC that are in excess of the 

actual fee that is due for a filing, the SEC records the excess payment in the 

registrant’s deposit liability account until it is earned by the SEC for future 

registrant filings. The SEC returns amounts in the deposit liability account to the 

registrant if the account has not had any activity against it for three years. These 

are known as dormant accounts. Conversely, non-dormant accounts had 

actively within the past three years. SEC also returns amounts upon request from 

the registrant. 

In May 2011, the SEC changed the length of time that funds could remain 

inactive in the registrants’ deposit liability account from six months to three years. 

The SEC stated that this was done to reduce inefficiency and the administrative 

burden for both account holders and SEC staff. Increasing this time also allows 

greater flexibility to registrants who overpaid the SEC for filings, owe future fees, 

and want to apply the overpayment to future registrant filing payments that are 

due to the SEC. 

Section 6(b)(1) of the Securities Act of 1933 provides that “at the time of filing a 

registration statement, the applicant shall pay to the Commission a fee . . . 

Section 6(b)(2) states that “[f]or each fiscal year, the Commission shall . . . adjust 

the rate required by” Section 6(b)(1). As of October 2012, the filing fees pursuant 

to Sections 6(b), 13(e) (repurchases of securities) or 14(g) (proxy solicitations 

and statements in corporate control transactions) of the Securities Act of 1933 – 

as well as for transaction filings pursuant to the Securities Exchange Act of 1934 

– amount to $136.40 per $1,000,000 of the maximum aggregate price at which 

an applicant’s securities are proposed to be offered. For aggregate prices below 

$1,000,000, the filing fees are prorated (i.e., the amount of fees is calculated by 

multiplying the aggregate offering amount by .00013640). 

The Office of Financial Management (OFM) is under the Office of the Chief 

Operating Officer and is led by the Chief Financial Officer. OFM provides 

assistance to the Office of the Chief Operating Officer in formulating the SEC’s

budget and authorization requests, monitoring the utilization of agency 

resources, and developing, overseeing, and maintaining the SEC’s financial 
3

 

1 EDGAR - Electronic Data Gathering Analysis and Retrieval System. 

Audit of the SEC’s Filing Fees Program March 29, 201

Report No. 514 

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systems. OFM’s activities include cash management, accounting, fee 

collections, travel policy deployment, and oversight of budget justifications and 

budget execution. Returning excess filing fees is also an OFM activity. OFM’s

Filing Fees Branch (FFB) administers this function for the SEC. The FFB is 

headed by the Chief of Filing Fees and has 14 government employees and 12 

contractor workers. According to prior U.S. Government Accountability Office’s 

(GAO) financial statement audits of the SEC, GAO identified amounts that were 

recorded in registrant’s deposit liability accounts that were not properly returned 

to registrants and amounts that were not properly recognized as revenue in the 

correct fiscal year. As a result, GAO concluded in the 2009 and 2010 financial 

statement audits that the untimely review and recognition of revenue in the 

incorrect period represented a significant deficiency in the SEC’s internal control 

over the registrant deposit account balances, which resulted in misstating filing 

fees revenue and related registrant deposit liability account amounts in the 

current period. The SEC uses the EDGAR1 system to collect, validate, index and 

accept the submissions of forms filed by registered companies. EDGAR

Momentum, also known as Fee Momentum, is a financial system that maintains 

accounting information pertaining to filing fees. This system also interfaces with 

EDGAR. 

As in prior years, the GAO fiscal year 2011 financial statement audit testing of 

filing fees transactions identified amounts recorded in the registrant deposit 

liability account that had not been properly returned to registrants and amounts that 

had not been properly recognized as revenue in the correct fiscal year. As a 

result GAO concluded that the SEC’s controls over registrant deposits and filing 

fees collectively represented a significant deficiency.

Subsequently, the fiscal year 2012 financial statement audit concluded that the 

SEC made notable progress in addressing internal control deficiencies GAO

previously reported. Specifically, OFM eliminated the backlog of registrant 

accounts that had no activity for three years by reviewing the account history, 

and where appropriate, returning funds to registrants or to the U.S. Department 

of the Treasury (Treasury). OFM developed additional controls that were put in 

place to monitor and review accounts that were approaching three years and had 

no activity. In addition, OFM implemented new controls such as strengthening 

review procedures over fee-bearing filings and testing procedures to estimate 

financial statement risk resulting from unrecorded revenues. As a result of the 

SEC’s increased controls and significant efforts to review and return dormant 

registrant accounts, as of September 30, 2012 GAO no longer considered the 

remaining control deficiencies in this area, individually or collectively, as a 

significant deficiency. Also, we reviewed OFM’s schedule of dormant accounts 

and interviewed FFB staff regarding the status of those accounts classified as 

dormant and concluded this issue is no longer a problem.
Audit of the SEC’s Filing Fees Program March 29, 2013

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We identified some insignificant issues related to training in which improvements 

could be made. However, we believe that overall training of FFB staff is 

adequate and they have the requisite skills needed to carry out their duties and 

responsibilities.

Finally, we performed refund disbursement confirmation testing to achieve the 

goal of determining whether the disbursements from Treasury are sent to the 

right registrant as requested. Based on our testing and review, we did not 

identify any exceptions. The sample disbursements that were selected for our 

testing were sent to the appropriate registrants as requested.

Objectives 

Objectives. Williams Adley’s overall audit objective was to determine whether 

OFM’s current filing fees policies and procedures are appropriate and internal 

controls exist to ensure filing fees to related assets and liabilities are safeguarded 

and properly accounted in the SEC’s financial reports. 

Specifically, our objectives were to determine whether:

• OFM had developed written policies and standard operating 

procedures covering oversight of the filing fees program;

• Filing fees staff are adequately trained and have the requisite skills 

needed to carry-out their duties and responsibilities;

• The EDGAR Momentum system used to track filing fees refund 

requests is appropriate;

• Filing fees backlogs and dormant accounts are properly 

administered and managed; and 

• Filing fees refunds are disbursed by Treasury to the appropriate 

registrants as requested.

Additionally, Williams Adley was asked to identify best practices and suggest 

areas for improving the filing fees process, where appropriate.
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Findings and Recommendations

Finding 1: Filing Fees Policies and Procedures 

Can be Improved

OFM should strengthen internal controls over policies and 

procedures to prevent unauthorized requests for filing fees 

refunds. Specifically, OFM’s internal guide OFM Reference 

Guide, Chapter 80.03, Filing Fee Revenue (OFM Reference 

Guide), August 2012, for filing fees does not require FFB 

staff verify registrant’s bank account information or that 

EDGAR sends an automated electronic notice to registrants 

indicating a request for a filing fee refund has been received. 

As a result, there is a risk that an unauthorized request for 

refunds could occur. In addition, OFM has not established 

timelines for clearing cancelled refund checks. 

OFM Should Strengthen Internal Controls to Prevent 

Unauthorized Requests for Refunds 

OFM does not have a process for confirming registrant bank information. A 

registrant can send a letter on the firm’s letterhead to OFM to request a refund be 

sent to a physical address, or deposited into the registrant’s bank account. A 

registrant can also initiate a written request in response to a letter/notice that 

OFM sends informing them their account will become dormant within 30 days, 

unless the registrant responds within 30 days to claim the refund. An account is 

considered dormant when there has been no deposit, withdrawal or other 

adjustment to it for three or more years. 

When written requests are received from registrants seeking a refund, FFB staff 

verifies the letterhead of the request, Central Index Key (CIK) and address 

matches the registrant’s information in the EDGAR system. However, our audit 

found that FFB staff does not verify the registrant’s bank account information that 

is provided to process the refund payment, and EDGAR does not send an 

automated electronic notice to the registrant indicating a filing fees refund 

request was received, because OFM’s Reference Guide covering FFB’s policies 

and procedures does not require these procedures. Our audit determined that if 

registrants could initiate on-line requests through EDGAR using their CIK and a 

password, the risk that refunds could go to an unauthorized person or to an 

incorrect bank account would be reduced. 
Audit of the SEC’s Filing Fees Program March 29, 2013

Report No. 514 

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17 C.F.R. § 202.3a (e) provides guidance for processing registrants’ refund 

requests. Specifically, the guidance states that, 

Funds held in any filing fees account in which there has not been a 

deposit, withdrawal or other adjustment for more than three years 

will be returned to the account holder, and account statements will 

not be sent again until a deposit, withdrawal or other adjustment is 

made with respect to the account. Filers must maintain a current 

account address to assure the timely return of funds. It may not be 

possible to return funds from inactive accounts if the Commission is 

unable to identify a current account address of an account holder 

after making reasonable efforts to do so.

Because the OFM Reference Guide does not have policies and procedures 

related to confirming registrant bank information, OFM could be exposed to 

embezzlement or other fraudulent activities by paying a refund to an

unauthorized individual. However, it should be noted that our audit did not reveal 

any instances of fraud. 

OFM Lacks Established Timelines for Clearing Cancelled Refund 

Checks 

OFM should strengthen its policies and procedures related to clearing cancelled 

refund checks to ensure a reasonable timeframe is established to reconcile 

cancelled checks. Cancelled refund checks typically are the result of bank 

closures, stale and dated checks, and changes to the registrant’s banking 

account data.

We tested a sample universe of 18,181 refund transactions and found OFM’s 

procedures to account for cancelled checks did not include a definitive timeframe 

for reconciling cancelled checks. This lack of policy resulted in OFM not 

reconciling and clearing $3,096,706 in payments for cancellation transactions

during fiscal years 2004 to 2010. The results of a GAO recommendation in the

SEC’s fiscal year 2010 financial statement audit resulted in OFM hiring 

contractors to reconcile the accounts. OFM returned the funds related to these 

cancelled refund checks to the registrant’s accounts or to Treasury in fiscal years 

2010 and 2011. 

The OFM Reference Guide, Section 5.17, discusses refund cancellations and 

reissues. However, the procedures do not address the timeframe for clearing 

transactions. OFM not having a reasonable timeframe for clearing transactions

could contribute to delays in refunding registrant funds and/or increases the risk 

the SEC could improperly account for refund cancellations and reissues. 
Audit of the SEC’s Filing Fees Program March 29, 2013

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Page 6 

Recommendation 1:

The Office of Financial Management should, within budget constraints, modify

the Electronic Data Gathering and Retrieval System (EDGAR) to generate an 

electronic confirmation letter or notice to registrants when a request for a 

refund is made.

Management Comments. OFM concurred with this recommendation. See 

Appendix V for management’s full comments.

OIG Analysis. We are pleased OFM concurred with this recommendation. 

OIG considers this recommendation resolved. However, the recommendation 

will remain open until documentation is provided to OIG that supports it has 

been fully implemented. 

Recommendation 2: 

The Office of Financial Management (OFM) should, within budget constraints, 

implement a policy requiring registrants initiate refunds on-line through the 

Electronic Data Gathering and Retrieval System (EDGAR) using a Central 

Index Key and password. Once this is done, OFM should phase out accepting 

written refund requests from registrants. 

Management Comments. OFM concurred with this recommendation. See 

Appendix V for management’s full comments.

OIG Analysis. We are pleased OFM concurred with this recommendation. 

OIG considers this recommendation resolved. However, the recommendation 

will remain open until documentation is provided to OIG that supports it has 

been fully implemented. 

Recommendation 3: 

The Office of Financial Management should include in its processes and 

procedures a definitive and reasonable timeline for reconciling cancelled 

refund transactions. 

Management Comments. OFM concurred with this recommendation. See 

Appendix V for management’s full comments.

OIG Analysis. We are pleased OFM concurred with this recommendation. 

OIG considers this recommendation resolved. However, the recommendation 

will remain open until documentation is provided to OIG that supports it has 

been fully implemented. 
 

2 Non-dormant registrant accounts are accounts that had activity within the past three years. 

Audit of the SEC’s Filing Fees Program March 29, 2013

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Finding 2: Review Procedures over Registrant 

Deposit Accounts Should Be Completed

OFM’s review of non-dormant registrant accounts2 has not 

been fully completed. In fiscal year 2013, OFM implemented 

a review process for non-dormant registrant accounts that is

based primarily on conducting a cost-benefit analysis. While 

this process identifies unrecognized revenue and estimates 

the financial statement risk, the agency is still at risk of not 

properly reporting revenue because the review process for 

some older accounts have not been fully completed. 

Filing Fees Backlog 

GAO’s fiscal year 2011 financial statement audit found the SEC had not 

effectively addressed previously reported internal control deficiencies in its 

process to timely recognize filing fees revenue. The fiscal year 2011 and 2010 

financial audits identified $2.3 million and $1.9 million, respectively, in revenue 

that was not properly recognized. 

During fiscal year 2011, OFM performed a risk assessment and identified the 

following risks related to filing fee transactions:

Risk 1 - Filing fee revenue is not complete because the registrant 

filed using the wrong form and, therefore, no fee was paid or a 

lower fee rate was used resulting in understated revenue.

Risk 2 - Revenue presented on the financial statements does not 

exist either because; (1) recorded revenue is not consistent with 

EDGAR or (2) revenue was recognized for filings that were not 

effective or revenue was recognized for an incorrect amount.

Risk 3 – Revenue is not complete because some amounts included 

in the registrant deposit liability should have been recognized as 

revenue in the current or a prior period.

In fiscal year 2012, OFM tested these risk areas and based on a statistical 

sample found that any errors would be within a tolerable limit for financial 

statements. 

OFM is in the process of reviewing non-dormant registrant accounts, based on 

the estimated costs and benefits for reviewing each one. Specifically, for non-
 

3 Dormant registrant accounts had no activity within the past three years.

Audit of the SEC’s Filing Fees Program March 29, 2013

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dormant accounts with balance equal to or greater than $1,000 or billings over 

$100,000, FFB staff performs an audit of the account balance to identify and 

correct any errors in recording revenue over the life of the account. Phase one of

this process is expected to be completed by the end of March 2013. Phase two 

is expected to be completed in March 2014. While OFM believes any errors that 

may be found in the registrant accounts will not be material to financial reporting, 

completing a review of cost-beneficial non-dormant accounts could confirm the 

amount of any errors.

For dormant registrant deposit accounts3 with balances equal to or greater than 

$1,000, FFB staff performs an audit of the account balance to identify and correct 

any errors in recording revenue over the life of the account. For registrant 

deposit accounts with balances of less than $1,000, an audit of the account 

balance is not performed.

FFB staff performs a number of steps to ensure revenue is presented fairly in the 

financial reports. For example, they will validate the: 

(1) Fee calculation in EDGAR, 

(2) Information in the official filings is correct and consistent with SEC 

rules, and 

(3) Filers have filed the appropriate forms for their business purpose. 

In addition, they perform a number of compensating controls, such as reviewing 

unapplied cash receipts, monitoring accounts receivables, and performing a third 

review of transactions on a sample basis.

 

The SEC’s Staff Accounting Bulletin No. 101, December 3, 1999 (SAB 101) 

provides guidance to auditors and public companies on recognizing, presenting 

and disclosing revenue in financial statements. According to SAB 101, revenue 

is recognized once the following criteria are met:

• There is persuasive evidence of an arrangement. 

• Delivery has occurred or services have been rendered.

• The seller’s price to the buyer is fixed or determinable.

• Collectability is reasonably assured.

FFB’s staff completion of the independent reviews will help to ensure timely and 

accurate financial statement reporting of revenues. 

Recommendation 4: 

The Office of Financial Management should complete its review of non-dormant 

registrant accounts based on the cost-benefit analysis the office devised. 
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Page 9 

Management Comments. OFM concurred with this recommendation. See 

Appendix V for management’s full comments.

OIG Analysis. We are pleased OFM concurred with this recommendation. 

OIG considers this recommendation resolved. However, the recommendation 

will remain open until documentation is provided to OIG that supports it has 

been fully implemented. 
Appendix I

Abbreviations

Audit of the SEC’s Filing Fees Program March 29, 2013

Report No. 514 

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CIK Central Index Key

EDGAR Electronic Data Gathering 

Analysis and Retrieval 

System

FFB Filing Fees Branch 

GAO U.S. Government 

Accountability Office

OFM Office of Financial 

Management

OIG Office of Inspector General

SAB 101 Staff Accounting Bulletin 

101

SEC or 

Commission

U.S. Securities and 

Exchange Commission

Treasury U.S. Department of the 

Treasury
Appendix II

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Scope and Methodology

Williams Adley conducted this performance audit 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 determined that the evidence obtained provides a reasonable basis for our 

findings and conclusions based on our audit objectives. 

Scope. The OIG contracted with Williams Adley to conduct a performance audit 

to identify weaknesses and areas for improvement with regard to the filing fees 

refund request process. We were asked to determine whether OFM’s current 

internal controls, safeguards and verification requests for the filing fees refund 

process were in place and operating effectively. The scope of our audit covered 

filing fees refund requests that were made to the OFM’s fee account services 

branch and were paid for the period January 2008 to March 2012. Williams 

Adley conducted its fieldwork at SEC Headquarters in Washington, D.C. from 

July 2012 to February 2013. 

Methodology. To determine if OFM had developed written policies and 

standard operating procedures covering oversight of the filing fees program, 

Williams Adley reviewed SEC’s regulations and policies and procedures 

pertaining to the Filing Fees Refund process. We also reviewed relevant federal 

laws, regulations and guidance. We reviewed SEC’s Performance and 

Accountability Reports to determine the impact of GAO’s findings on our audit 

procedures and to determine the status of applicable recommendations. We 

conducted interviews with select personnel in the Filing Fees and General 

Accounting Branch who had responsibilities related to the filing fees refund 

process. Williams Adley performed a walkthrough of the filing fees refund 

process including obtaining documentation used in the process. We identified 

areas in which improvements could be made.

To determine if filing fees staff are adequately trained and have the requisite 

skills needed to carry out their duties and responsibilities, Williams Adley 

reviewed OFM’s staff training policies and plan. We conducted interviews with 

select personnel in the Filing Fees and General Accounting Branch who had 

responsibilities related to the OFM training process. We obtained, reviewed and 

analyzed the training material to determine if it was sufficient. We also reviewed 

and analyzed the FFB staff backgrounds and qualifications to determine their 

adequacy for the positions they held. Williams Adley identified some insignificant 

areas in which improvements could be made. However, we believe that overall 

training of FFB staff is adequate and that they have the requisite skills needed to 

carry out their duties and responsibilities. 
Appendix II

Audit of the SEC’s Filing Fees Program March 29, 2013

Report No. 514 

Page 12

To determine if the EDGAR Momentum system used to track filing fees refund 

requests is appropriate, Williams Adley reviewed related OFM and OIG 

documentation to help us obtain an understanding of the system used to track 

filing fees refund requests. We prepared a system process memorandum and 

conducted a system walkthrough with the FFB. We conducted interviews with 

the staff in FFB and select GAO personnel who had responsibilities related to the 

EDGAR Momentum system. We reviewed the system reference materials, the 

EDGAR documents, and sample reports. We reviewed and analyzed the 

EDGAR Momentum user roles. Williams Adley performed system access and 

change testing. We analyzed the Statement on Standards for Attestation 

Engagements No. 16 report for U.S. Bancorp Lockbox system and the potential 

impact on the audit. We did not identify areas in which improvements could be 

made. 

To determine if filing fees backlogs and dormant accounts are properly 

administered and managed, Williams Adley conducted interviews with FFB select 

personnel who had responsibilities related to the administration of the filing fees 

backlogs and dormant accounts. We randomly selected three samples for 

testing from the population of refund transactions for the period January 2008 to 

March 2012: 45 refund transactions greater than $1,000; 45 refund transactions 

less than $1,000; and 15 negative refund transactions. We also judgmentally 

selected a sample of what appeared to be 20 duplicate transactions. We 

obtained, reviewed and analyzed the filing fees refund packet for the selected 

transactions. According to the SEC’s fiscal year 2011 Performance and 

Accountability Report, as of September 30, 2011, there were 2,042 dormant 

registrant accounts that totaled over $12 million. As of February 28, 2013, there 

were 22 dormant accounts that were more than 30 days past the three-year 

cutoff that amounted to $129,000. Also, there were 69 accounts that became 

dormant that were less than 30 days past the three-year cutoff that amounted to 

$51,000 and there were 118 accounts nearing dormancy that amounted to 

$105,000. SEC hired contractors to assist in reducing the number of dormant 

accounts to a level that we no longer consider this issue to be a problem. We 

identified areas where improvements could be made.

To determine whether the disbursements from Treasury are sent to the 

appropriate registrants as requested, Williams Adley performed refund 

disbursement confirmation testing. From the population of the samples that were 

selected for testing, we identified 25 registrant initiated refund requests and used 

those 25 as our sample for Refund Disbursement Confirmation Testing. We 

compared the refund request packages and SEC reviews provided by EDGAR 

Momentum to Secure Payment System confirmations from Treasury to determine 

if the refund disbursements have been processed and sent to the registrants with 

the same name, address/bank account, amount and the disbursement dates that 

are after EDGAR Momentum submission dates. 
Appendix III

Criteria

17 C.F.R. § 202.3a (e). “Funds held in any filing fees account in which there has 

not been a deposit, withdrawal or other adjustment for more than three years will 

be returned to the account holder, and account statements will not be sent again 

until a deposit, withdrawal or other adjustment is made with respect to the 

account. Filers must maintain a current account address to assure the timely 

return of funds. It may not be possible to return funds from inactive accounts if 

the Commission is unable to identify a current account address of an account 

holder after making reasonable efforts to do so.” 

U.S. Securities and Exchange Commission SAB 101. Provides guidance to 

auditors and public companies on recognizing, presenting and disclosing 

revenue in financial statements. According to SAB 101 revenue is recognized 

once the following criteria are met:

• There is persuasive evidence of an arrangement. 

• Delivery has occurred or services have been rendered.

• The seller’s price to the buyer is fixed or determinable.

• Collectability is reasonably assured.

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Report No. 514 

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Appendix IV

List of Recommendations

Audit of the SEC’s Filing Fees Program March 29, 2013

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Recommendation 1:

The Office of Financial Management should, within budget constraints, modify 

the Electronic Data Gathering and Retrieval System (EDGAR) to generate an 

electronic confirmation letter or notice to registrants when a request for a refund 

is made. 

Recommendation 2: 

The Office of Financial Management (OFM) should, within budget constraints, 

implement a policy requiring registrants initiate refunds on-line through the 

Electronic Data Gathering and Retrieval System (EDGAR) using a Central Index 

Key and password. Once this is done, OFM should phase out accepting written 

refund requests from registrants. 

Recommendation 3: 

The Office of Financial Management should include in its processes and 

procedures a definitive and reasonable timeline for reconciling cancelled refund 

transactions. 

Recommendation 4: 

The Office of Financial Management should complete its review of non-dormant 

registrant accounts based on the cost-benefit analysis the office devised. 
Appendix V

Management Comments

Audit of the SEC’s Filing Fees Program March 29, 2013

Report No. 514 

Page 15
Audit Requests and Ideas

The Office of Inspector General welcomes your input. If you would like to 

request an audit in the future or have an audit idea, please contact us at:

U.S. Securities and Exchange Commission

Office of Inspector General

Attn: Assistant Inspector General for Audits (Audit Request/Idea)

100 F Street, N.E.

Washington D.C. 20549-2736

Tel. #: 202-551-6061

Fax #: 202-772-9265

Email: oig@sec.gov

SEC OIG Hotline 

To report fraud, waste, abuse, and mismanagement at SEC, 

contact the Office of Inspector General at:

Phone: 877.442.0854

Web-Based Hotline Complaint Form:

www.reportlineweb.com/sec_oig