The Securities and Exchange Commission has its own problems over bungled books – with millions in cash slipping through the cracks, and a computer system so vulnerable that hackers can run wild inside Wall Street’s watchdog agency.
A critical audit by the Government Accountability Office (GAO) said the SEC has failed to maintain controls in three key areas – security of its computer system, handling of the cash paid in disgorgement and penalties, and keeping track of equipment and assets.
The audit praised the SEC’s new chief Chris Cox for fixing most of the SEC’s internal control problems from a disastrous audit the prior year, but said the agency still has “significant deficiencies.”
Even with Cox’s crackdown, the GAO said the SEC still isn’t handling its cash correctly. As an example, it said $21 million paid as a disgorgement from an unidentified firm wasn’t even recorded on the books, making it difficult to know if penalties are paid or ever collected.
Auditors said they found 17 weaknesses in SEC computer security system.
“As a result, sensitive data – including payroll and financial transactions, personnel data, and regulatory and other mission-critical information – remains at risk of unauthorized disclosure, modification or loss.”
Until the SEC beefs up security, the audit said the “SEC will not have sufficient assurances that financial information and financial assets are adequately safeguarded from inadvertent or deliberate misuses, fraudulent use, improper disclosure or destruction.”