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United States Securities and Exchange Commission, Office of Inspector General,
Mail Stop 11-7, 450 Fifth Street N.W., Washington, D.C. 20549 or call (202)
Audit Report No. 280
May 26, 1998
We have evaluated the internal
controls of the Securities and Exchange Commission ("Commission")
with respect to the official travel of the Commissioners. We examined the
relevant Commission policies and tested all of the Commissioners' travel
vouchers processed during the period from October 1, 1997 to March 31,
1998.1 We tested all 46 trips (100% of the Commissioners' travel vouchers
processed) to determine that the travel was for official business, was
for a reasonable period of time given the purpose of the trip, and that
the expenses claimed were valid.
Our testing was performed in accordance
with the travel related provisions of the General Accounting Office's Guide
for Evaluating and Testing Controls Over Sensitive Payments, dated May
1993. In addition, we contemporaneously compared overall Commission travel
policy to the recommendations of the Subcommittee on National Economic
Growth, Natural Resources, and Regulatory Affairs ("Subcommittee") of the
House Committee on Government Reform and Oversight and performed additional
control evaluations as part of our audit of travel upgrades (Audit Report
The Commission and Commission management are responsible for establishing
and maintaining internal controls. In fulfilling this responsibility, estimates
and judgments by management are required to assess the expected benefits
and related costs of internal control policies and procedures. Because
of inherent limitation in any system of internal control, errors or irregularities
may nevertheless occur and not be detected. Also, projection of any evaluation
of the controls to future periods is subject to the risk that procedures
may become inadequate because of changes in conditions or that the effectiveness
of the designed operations of policies and procedures may deteriorate.
We conducted our work in accordance with generally accepted government
auditing standards, except that our independence, with respect to the Chairman
of the Commission, is limited by the provisions of the Inspector General
Act of 1978, as amended, applicable to Designated Federal Entities.
The Office of The Comptroller filed comments on our draft report
(attached). Generally, it concurred with our findings and recommendations.
The Office of the Comptroller indicated that the offices of the Chairman
and Executive Director concurred with its comments.
The results of our tests indicate
that, with respect to the items tested, the Commission complied in all
material respects with the internal policies and procedures related to
travel by the Commissioners. However, we are making three recommendations
to improve the operations of the controls.
DOCUMENT THE PURPOSE OF THE TRIP
The Commission has agreed to report
certain information about the Commissioners' travel, including the purposes
of trips, to the Subcommittee on a quarterly basis. This information includes
whether the Commission received an invitation for a given trip or if it
was initiated by the Commission.
On 14 of the 46 vouchers tested, the
purpose of the trip was not adequately documented. This meant that staff
of the Comptroller's Office had to research the purpose for the trip by
contacting the Commissioners' offices. This situation delays preparation
of the report to the Subcommittee.
The Office of the Comptroller should
reiterate its guidance to the Commissioners' staffs that detailed documentation,
supporting the purpose of the trip, be included with the travel order or
TIMELY SUBMISSION OF TRAVEL VOUCHERS
Internal Commission guidance requests
that each traveler submit their travel voucher within five days. To determine
if the Commissioners submitted their vouchers to the Comptroller's Office
within five days of travel, we compared the trip completion date to the
date they signed their voucher. We found that of the 46 vouchers filed,
only five were signed within five days. On average, approximately 25 days
elapsed before the Commissioners filed their vouchers; the range was from
2 to 99 days. These delays also interfere with the Comptroller's timely
submission of the travel report to the Subcommittee.
The Commissioners should establish
procedures in their offices that will ensure the timely submission of their
travel vouchers to the Office of the Comptroller.
Staff in each of the Commissioners'
office prepare their respective Commissioner's travel vouchers.2 Seventeen
percent of the Commissioners' travel vouchers (other than the Chairman's)
contained errors (e.g., incorrect calculations of per diem, inclusion
of unallowable expenses) that required correction by the Comptroller's
Office. It is our understanding that this is a higher error rate than for
the Commission staff as a whole.
The Commissioners should require
the staff who prepare their travel vouchers to attend travel voucher training
to be provided by the Office of the Comptroller.
1 There were no relocation expenses processed during the period.
2 The Office of the Executive Director reviews the Chairman's travel vouchers before submission to the Comptroller.