Management report: improvements needed in SEC's internal controls and accounting procedures

Original publisher: Washington, DC : U.S. Govt. Accountability Office, [2010] OCLC Number: (OCoLC)613303712 Subject: Financial statements -- United States -- Auditing. Excerpt: ... Registrant deposits represent collections from registrants for securities registration, tender offer, merger, and other fees ( filing fees ). SEC recorded filing fee collections in a registrant deposit liability account until earned by SEC from a future filing. These collections, when earned, provide the resources SEC used to fund its own operations. Our review of SEC's liability for registrant deposits as of September 30, 2009, identified approximately $ 27 million in deposit accounts that were dormant for six months or more, but were not returned to registrants. We also noted that there were no readily and routinely available reports for effectively managing the deposit operations. Our audit also identified amounts in the registrant deposit liability account that SEC earned in prior years and therefore should have been recognized as revenue in those years. SEC's practice for managing deposit operations is inconsistent with its own documented process. As a result, a significant balance in dormant accounts remained as of the end of fiscal year 2009, and SEC's ability to effectively comply with applicable federal regulations was significantly impaired. SEC management attributed the significant balance in dormant accounts to a lack of dedicated resources assigned to perform the labor intensive reviews of deposit account activity prior to the disbursement of refunds. In order to determine whether a full refund is owed to the registrants or if a portion is earned fee revenue that should be recognized, SEC policy included a review of all accounts with balances above $ 500. However, the passage of time increases the difficulty in performing the review procedures and ultimately returning the funds to their rightful owners. Some of the businesses involved may have already ceased operations....