Federal watchdog says SEC security issues put financial data at risk

A congressional watchdog has tasked the U.S. Securities and Exchange Commission (SEC) with addressing a number of security weaknesses impacting its system.

On Thursday, the U.S. Government Accountability Office (GAO) released a report (PDF) detailing the issues, which included SEC not encrypting sensitive data, properly identifying and authenticating users, or securely configuring a vital financial system, leaving it vulnerable to attack.

According to the 25-page report, “the information security weaknesses existed, in part, because SEC did not effectively oversee and manage the implementation of information security controls during the migration of this key financial system to a new location."

The watchdog said that SEC did not adequately oversee a contractor it hired to migrate its systems to a different data center last June.

As a result of SEC's need to improve security controls, GAO determined that the agency – which regulates the securities market, including exchanges, brokers, dealers and investment firms – had a “significant deficiency in internal control over financial reporting for fiscal year 2013.”

-Danielle Walker, SCmagazine.com
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SEC taps Capital One exec

The Securities and Exchange Commission has named Jeff Heslop, formerly a top information risk management executive at Capital One Financial Corp., its first-ever chief operating officer for information technology, financial reporting and records management.

At Capital One, Heslop headed the company’s information and resiliency risk management.
“The creation of the chief operating officer position will enhance our ongoing effort to refocus resources and make this agency more efficient and effective,” said SEC Chairman Mary Schapiro in a statement.

Heslop, who joined the agency May 17, reports directly to Schapiro and oversees operations of its Office of Information Technology and the financial and accounting functions of the agency’s Office of Financial Management.

Heslop, 55, spent 12 years at McLean-based Capital One (NYSE: COF), most recently as managing vice president of information risk management.

- JeffClabaugh, Washington.BizJournals.com
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Today's GAO Publication

The Government Accountability Office (GAO) today released the following correspondence:

Management Report: Improvements Needed in SEC's Internal Controls and Accounting Procedures.
GAO-09-376R, April 2
http://www.gao.gov/cgi-bin/getrpt?GAO-09-376R

Today's GAO Publications

The Government Accountability Office (GAO) released the following publications:

Inspectors General: Independent Oversight of Financial Regulatory Agencies, by Gary L. Kepplinger, general counsel, before the Subcommittee on Government Management, Organization, and Procurement, House Committee on Oversight and Government Reform.
GAO-09-524T, March 25.
http://www.gao.gov/cgi-bin/getrpt?GAO-09-524T

U.S. Department of Agriculture: Improved Management Controls Can Enhance Effectiveness of Key Conservation Programs, by Lisa Shames, director, natural resources and environment, before the Subcommittee on Conservation, Credit, Energy, and Research, House Committee on Agriculture.
GAO-09-528T, March 25.
http://www.gao.gov/cgi-bin/getrpt?GAO-09-528T
Highlights - http://www.gao.gov/highlights/d09528thigh.pdf

U.S. Postal Service: Escalating Financial Problems Require Major Cost Reductions to Limit Losses, by Phillip Herr, director, physical infrastructure issues, before the Subcommittee on Federal Workforce, Postal Service, and the District of Columbia, House Committee on Oversight and Government Reform.
GAO-09-475T, March 25.
http://www.gao.gov/cgi-bin/getrpt?GAO-09-475T
Highlights - http://www.gao.gov/highlights/d09475thigh.pdf

Securities and Exchange Commission: Oversight of U.S. Equities Market Clearing Agencies.
GAO-09-318R, February 26.
http://www.gao.gov/cgi-bin/getrpt?GAO-09-318R

Today's GAO Publications

The Government Accountability Office (GAO) today released the following testimonies:

Troubled Asset Relief Program: Status of Efforts to Address Transparency and Accountability Issues, by Gene L. Dodaro, acting comptroller general, before the Senate Committee on Banking, Housing, and Urban Affairs.
GAO-09-359T, February 5.
http://www.gao.gov/cgi-bin/getrpt?GAO-09-359T

Financial Regulation: A Framework for Crafting and Assessing Proposals to Modernize the Outdated U.S. Financial Regulatory System, by Gene L. Dodaro, acting comptroller general, before the Senate Committee on Banking, Housing, and Urban Affairs.
GAO-09-349T, February 4.
http://www.gao.gov/cgi-bin/getrpt?GAO-09-349T

Today's GAO Publications

The Government Accountability Office (GAO) today released the following report and testimony:

High-Risk Series: An Update.
GAO-09-271, January 22
http://www.gao.gov/cgi-bin/getrpt?GAO-09-271
Highlights - http://www.gao.gov/highlights/d09271high.pdf

Real Property: Infrastructure Investment Presents Opportunities to Address Long-standing Real Property Backlogs and Reduce Energy Consumption.
GAO-09-324T, January 22 http://www.gao.gov/cgi-bin/getrpt?GAO-09-324T

Today's GAO Publication

The Government Accountability Office (GAO) today released the following testimony:

Financial Regulation: A Framework for Crafting and Assessing Proposals to Modernize the Outdated U.S. Financial Regulatory System.
GAO-09-314T, January 21
http://www.gao.gov/cgi-bin/getrpt?GAO-09-314T

Today's GAO Publication

The Government Accountability Office (GAO) today released the following testimony:

Financial Regulation: A Framework for Crafting and Assessing Proposals to Modernize the Outdated U.S. Financial Regulatory System, by Gene L. Dodaro, acting comptroller general, before the Congressional Oversight Panel.
GAO-09-310T, January 14.
http://www.gao.gov/cgi-bin/getrpt?GAO-09-310T

Today's GAO Publication

The Government Accountability Office (GAO) today released the following report:

Financial Regulation: A Framework for Crafting and Assessing Proposals to Modernize the Outdated U.S. Financial Regulatory System.
GAO-09-216, January 8.
http://www.gao.gov/cgi-bin/getrpt?GAO-09-216
Highlights - http://www.gao.gov/highlights/d09216high.pdf

Today's GAO Publications

The Government Accountability Office (GAO) released the following publications:

Federal Real Property: Government's Fiscal Exposure from Repair and Maintenance Backlogs Is Unclear.
GAO-09-10, October 16.
http://www.gao.gov/cgi-bin/getrpt?GAO-09-10
Highlights - http://www.gao.gov/highlights/d0910high.pdf

Financial Audit: Securities and Exchange Commission's Financial Statements for Fiscal Years 2008 and 2007.
GAO-09-173, November 14.
http://www.gao.gov/cgi-bin/getrpt?GAO-09-173
Highlights - http://www.gao.gov/highlights/d09173high.pdf

U.S. Government Accountability Office: Performance and Accountability Report Fiscal Year 2008.
GAO-09-1SP, November 14
http://www.gao.gov/cgi-bin/getrpt?GAO-09-1SP

Financial Audit: IRS's Fiscal Years 2008 and 2007 Financial Statements.
GAO-09-119, November 10.
http://www.gao.gov/cgi-bin/getrpt?GAO-09-119
Highlights - http://www.gao.gov/highlights/d09119high.pdf

Today's GAO Publication

The Government Accountability Office (GAO) today released the following report:

Financial Audit: Securities and Exchange Commission's Financial Statements for Fiscal Years 2007 and 2006.
GAO-08-167, November 16
http://www.gao.gov/cgi-bin/getrpt?GAO-08-167
Highlights - http://www.gao.gov/highlights/d08167high.pdf

Upcoming Events - May 23, 2007

The Association of Government Accountants (AGA)
Dinner and awards ceremony in honor of eleven federal agencies that have been awarded the 2007 Certificate of Excellence in Accountability Reporting.

The recipients include: the Commodity Futures Trading Commission; the Housing and Urban Development Department; the Interior Department; the General Services Administration; the Government Accountability Office; the Nuclear Regulatory Commission; the Patent and Trademark Office; the Securities and Exchange Commission; the Small Business Administration; and the Social Security Administration.
[Note: There will be a media availability following the event.]

Participants: Clay Johnson III, deputy director for management at the Office of Management and Budget; U.S. Comptroller General David Walker of the Government Accountability Office; Linda Combs, comptroller of the Office of Management and Budget; and Redmond Van Danker, executive director of the AGA

Location: National Press Club, 14th and F Sts., NW, 13th Floor, Washington, D.C.. 6 p.m. (May 23, 2007)

Contact: Jennifer Curtis, 703-562-0770, jcurtin@agacgfm.org; [http://www.agacgfm.org]

Federal Accounting Standards
Federal Accounting Standards Advisory Board (FAR. Page 39318)

Meeting to discuss their conceptual framework, social insurance, application of the liability definition, the federal entity, natural resources, inter-entity costs, technical agenda, and any other topics as needed. May 23-24.

Location: Government Accountability Office, 441 G St., NW, room 7C13, Washington, D.C..
9 a.m. (May 23, 2007)

Contact: Wendy Comes, 202-512-7350

Unprecedented Eleven Federal Agencies to Receive AGA's Prestigious CEAR Award

AGA is pleased to recognize the outstanding Fiscal Year 2006 performance and accountability reporting efforts of the following federal agencies, which are the recipients of the Certificate of Excellence in Accountability Reporting (CEAR):

• U.S. Commodity Futures Trading Commission (1)
• U.S. Department of Housing and Urban Development (1)
• U.S. Department of the Interior (7)
• U.S. Department of Labor (7)
• U.S. General Services Administration (3)
• U.S. Government Accountability Office (6)
• U.S. Nuclear Regulatory Commission (6)
• U.S. Patent and Trademark Office (5)
• U.S. Securities and Exchange Commission (1)
• U.S. Small Business Administration (1)
• U.S. Social Security Administration (9)

*The number in parenthesis after each agency indicates the number of years, including this year, that the agency has received the award.

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GAO: SEC's internal repayments controls less risky

The Securities and Exchange Commission has improved internal controls and information systems for repayments and penalties paid by securities violators to the extent that the Government Accountability Office has eliminated them as major weaknesses that increase risk.

- Mary Mosquera, FCW.com

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Today's GAO Correspondence

GAO released the following correspondence.

Internal Control:
Improvements Needed in SEC's Accounting and Operational Procedures.
GAO-07-482R, April 3
http://www.gao.gov/cgi-bin/getrpt?GAO-07-482R

Today's GAO Report

The Government Accountability Office (GAO) today released the following report:

Financial Audit:
Securities and Exchange Commission's Financial Statements for Fiscal Years 2006 and 2005.
GAO-07-134, November 15.
http://www.gao.gov/cgi-bin/getrpt?GAO-07-134
Highlights - http://www.gao.gov/highlights/d07134high.pdf

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."