SEC Beefing Up Internal Reporting in Response to GAO Audits

"The Securities and Exchange Commission (SEC), the agency charged with overseeing the financial reporting of public companies, is 'redoubling' its efforts to shore up major deficiencies in its own financial reporting procedures and internal controls that were uncovered in an audit by the Government Accountability Office.

SEC Chairman Christopher Cox has further told the GAO that his agency will “fully resolve the material weaknesses” uncovered by an audit in fiscal year 2004 and largely unresolved by the time his agency was audited again in fiscal 2005, according to a letter from Jeanette M. Franzel, the GAO’s director financial management and assurance

Steps being taken by the SEC, according to Franzel’s letter, include: adding “resources and expertise” to the SEC’s financial management office, creating a set of written procedures governing financial reporting processes and related internal controls, and establishing a Financial Management Oversight Committee to provide an executive level review of the SEC’s financial statements and regularly review its accounting policies and internal controls. That committee is scheduled to start work in the second quarter."