U.S. Securities & Exchange Commission
SEC Seal
Home | Previous Page
U.S. Securities and Exchange Commission

This document is an HTML formatted version of a printed document. The printed document may contain agency comments, charts, photographs, appendices, footnotes and page numbers which may not be reproduced in this electronic version. If you require a printed version of this document contact the 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) 942-4460.


Audit No. 271
September 25, 1998

Executive Summary

Our audit of the Commission's property system found that management controls and property records can be improved. The Office of the Executive Director plans to convene a task force in September 1998 which will issue a revised property management regulation with new procedures. Presented below are our findings and recommendations, which can be considered by the task force or the offices involved.

Our recommendations include improving data entry and reconciliation procedures; enhancing controls over property acquired through credit cards; and asking the Board of Survey to make recommendations to correct systemic problems.

Objectives and Scope

The audit objectives were to determine whether property system controls are adequate and functioning as intended, and whether property records are accurate and reliable. During the audit, we interviewed Commission property staff, conducted an inventory of property in headquarters and the Operations Center,1 reviewed property records, and performed tests of the property system.

The audit was conducted between August 1997 and August 1998 in accordance with generally accepted government auditing standards issued by the General Accounting Office.


The Federal Property and Administrative Services Act of 1949 requires federal agencies to maintain adequate inventory controls and accountability systems for their property. In compliance with this and other applicable guidance, the Office of Administrative and Personnel Management (OAPM) has issued administrative regulation SECR 9-2, the Property Management Program.

Under this regulation, the Associate Executive Director of OAPM is the Property Management Officer (PMO) with overall responsibility for the program. Within OAPM, the Facilities branch has day-to-day responsibility for implementing the property program, including maintaining the property tracking system, known as TRAQ, and performing periodic inventories.

Other Commission components also play important roles in property management. The Office of the Comptroller maintains the general ledger accounts showing the acquisition cost and depreciated value of capitalized property. The Office of Information Technology provides ADP support for the property system, and has responsibilities for ordering, storing, and tracking ADP property in headquarters. Each division or office is responsible for safeguarding their property, especially ADP property. In addition, the field offices enter property information into TRAQ.


We found that over the last several years, the Commission has taken steps to improve property management. The new property tracking system (TRAQ) enables users to quickly retrieve and query property records. By using bar codes, TRAQ facilitates the tracking and recording of property.

OAPM has focused its efforts on high risk items, such as ADP property, whose size and value has increased rapidly. To help safeguard personal computers from theft, OAPM embossed them with the words "S.E.C. U.S. Government Property." Also, since the threshold for capitalized property is $2500, they eliminated an annual inventory of furniture, which was considered low risk, to conserve resources.

Our audit found that property controls and records need further improvement. Similarly, the Office of the Executive Director recently reviewed certain property management procedures, particularly in the regions. The OED intends to convene a task force in September 1998, which will issue a new property management regulation and develop a standardized reconciliation process between OAPM and OC, among other improvements. We concur with the OED's intended actions.


Commission regulation SECR 9-2 requires that OAPM's property records (in TRAQ) be reconciled monthly with the records of capitalized property in the Comptroller's accounting system FFS ( the Federal Financial System). This reconciliation is not currently being performed, and consequently TRAQ and FFS records are not in agreement.

Our analysis and discussions with property officials suggested that a number of factors make reconciliation difficult and administratively burdensome:

  • OAPM is not always aware of vendor discounts taken by the Comptroller's Office, so these discounts are not reflected in TRAQ . The discounts reduce the acquisition cost of the property in FFS, causing a discrepancy between the records.

  • OAPM does not always record ADP peripherals (such as non-standard monitors), which causes TRAQ records to be understated.

  • OAPM and OC make some data entry omissions and errors: e.g., they omit units or the purchase order number, or record the wrong serial number, purchase order number, or object class. Their recording task is made more difficult when large quantities of computers are received at one time.

  • The reconciliation report (known as the Federal Financial System Reconciliation Report) prepared by OIT does not always reflect all payments made in FFS, possibly due to a programming error.

  • Serial numbers on delivered computers possibly may differ from those on the dealer's invoice (a dealer error which may not be detected with current procedures).

Our recommendations to address these sources of errors are presented below. As mentioned above, the OED intends to develop a standardized reconciliation process between OAPM and OC.

Recommendation A

The Office of Administrative and Personnel Management and the Comptroller's Office should reconcile their property records monthly as required.

Recommendation B

The property task force to be convened by OED should take steps to improve the accuracy of data entry. For example, data entry could be reviewed by a supervisor, and staff could receive additional training and guidance.

Recommendation C

OAPM and OC should coordinate to ensure that property transactions are being recorded consistently in TRAQ and FFS. For example, the Comptroller's Office should notify OAPM of vendor discounts taken.

Recommendation D

OAPM should reduce the administrative burden of recording large numbers of computers at one time. For example, it could break up purchases into smaller amounts, or obtain additional clerical assistance for data entry.

Recommendation E

OIT should review the reconciliation report (in consultation with OC and OAPM) to correct any programming errors and improve its usefulness.

Recommendation F

The property task force should develop procedures to detect errors in dealer invoices (e.g., wrong serial numbers). The information in invoices should be compared to receiving reports and purchase orders.


Under a GSA contract, federal employees chosen by their agency can make small purchases with a government VISA card. The Office of Administrative and Personnel Management (OAPM) has issued regulations for the Commission's credit card program (SECR 10-6). Under the regulations, the card may be used to purchase ADP supplies and services with advance approval from the Office of Information Technology.

OAPM told us that card holders do not always enter ADP property they purchase into TRAQ. Also, the Comptroller's FFS records for ADP credit card purchases do not contain an identifying number (analogous to the purchase order number) linking FFS to TRAQ, which makes reconciliation between FFS and TRAQ more difficult.

The task force being convened by OED could develop procedures to improve recording of capitalized ADP equipment purchased by credit card. For example, OIT could issue a control number when it approves credit card purchases of capitalized ADP equipment. This control number would be recorded in FFS and TRAQ.

Recommendation G

The property task force should develop procedures to ensure that credit card purchases of capitalized ADP equipment are properly recorded.


The Commission has established by regulation (SECR 9-3) a Board of Survey to examine occurrences of damage to or loss of government owned property, and to fix responsibility for such damage or loss (i.e., whether to hold the employee personally responsible). The Board consists of three members at the Assistant Director level who are appointed by the Director of OAPM on an ad hoc basis.

We reviewed seven reports issued by the Board. They showed problems with the disposal of obsolete equipment, and the tracking of items submitted to OIT for repair or loaned to vendors for training. These problems caused or contributed to the damage or loss.

Currently, the Board is not asked to develop recommendations to address the cause of problems relating to the damaged or lost property. The Board's reports could be a way to improve the property system.

Recommendation H

OAPM should ask the Board of Survey to provide recommendations when appropriate for corrective actions. When the Board of Survey regulation is revised, this change should be included in the revision.


According to the property regulation (SECR 9-2), property officers are required to record property by room number, and may also use the employee name. OAPM staff told us that it was very difficult to find items during an inventory when they are not listed by employee.

We selected 25 computers from TRAQ records to determine if they were at the assigned location. Three were not, and they could not be located because the records did not include the employee name.

Recommendation I

OAPM should require that accountable property be recorded by employee name (for existing property as well as new purchases). The revised property management regulation should reflect this change.


OIT is responsible for determining if unwanted ADP equipment can be used by other Commission divisions or offices. If not, it is required to submit a memorandum to OAPM declaring the equipment surplus.

In several cases, the Board of Survey found that computers were discarded without proper authorization and removal from the property records.

Recommendation J

OAPM should remind property officers of the procedures for disposal of unwanted property.


1 The Office of Inspector General reviews property records in the field offices during cyclical reviews of the field offices' financial and administrative controls.



Modified: 08/18/2004