U.S. Securities and Exchange Commission

U.S. Securities and Exchange Commission

Management Report to Accompany

the Office of Inspector General

Semiannual Report to Congress

For the period October 1, 2022 through March 31, 2023

May 2023

U . S . S E C U R I T I E S A N D E X C HA N G E C O M M I S S I O N

Management Report to Accompany the

Office of Inspector General Semiannual Report to Congress

October 1, 2022 – March 31, 2023

Section 5(b) of the Inspector General Act of 1978, as amended, (Inspector General Act), requires the

Commission to transmit to the appropriate committees or subcommittees of the U.S. Congress a

Management Report, containing certain statistical tables and any comments deemed appropriate, to

accompany the Office of Inspector General’s (OIG’s) Semiannual Report. 1 This Management Report

presents the required information for the reporting period of October 1, 2022 through March 31,

2023.

I.

Overview of SEC Audit Follow-up Activities

The SEC is committed to timely completion of corrective actions on OIG audit, inspection, and

evaluation recommendations. At the commencement of this semiannual reporting period, there

were 31 open OIG recommendations. During the period, management succeeded in obtaining OIG

concurrence to close 18 recommendations. Of the 18 closed recommendations, management

submitted 11 (or 61 percent) requests for closure in less than one year. The SEC also received 4

new OIG reports during the reporting period containing a total of 32 recommendations for

improving the agency’s processes and programs. At period-end, final action was pending on 45

recommendations from 10 reports. One of those recommendations was pending OIG concurrence

for closure.

II. Reports on Instances of Whistleblower Retaliation

Section 5(b)(3) of the Inspector General Act requires the SEC Management Report to include a

statement with respect to any settlement agreement entered into by the agency with an official

found by the Inspector General to have engaged in retaliation against a whistleblower. The SEC has

no such settlement agreements to report.

III. Reports with Monetary Savings

Section 5(b)(2) of the Inspector General Act requires the SEC Management Report to include

statistical information regarding any management decision or final action taken on each audit,

inspection, or evaluation report on which final action had not been taken before the reporting

period. The information required to be reported includes the dollar value of any “disallowed cost”

or “recommendation that funds be put to better use.”

The Inspector General Act defines a “disallowed cost” as a cost questioned by the OIG that agency

management has decided should not be charged to the agency. The Inspector General Act defines

“recommendation that funds be put to better use” to mean an OIG recommendation that funds

could be used more efficiently if management took actions to implement and complete the

accompanying recommendation. During the reporting period, OIG did not issue a report that

1 The SEC’s Management Response is based on the requirements of Section 5 of the Inspector General Act as

amended by the James M. Inhofe National Defense Authorization Act for Fiscal Year 2023, Pub. L. No. 117-263,

§ 5273, Dec. 23, 2022, 136 Stat. 2395, 3241.

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contained any questioned costs or any recommendations that funds be put to better use. In

addition, there are no outstanding management decisions on questioned costs or recommendations

that funds be put to better use identified in OIG reports from prior reporting periods.

Additional information regarding management decisions and final actions taken during the

reporting period for reports on which final action had not been taken before the reporting period

began is included below in the next section and Table 1.

IV. Reports with Pending Corrective Action

Section 5(b)(4) of the Inspector General Act requires the SEC Management Report to include a

statement with respect to each audit, inspection, and evaluation report on which a management

decision has been made but final action has not been taken. Table 1 presents the required

information.

Table 1. Reports Pending Final Action at Start of Reporting Period

(Reporting Period October 1, 2022 through March 31, 2023)

Report No./Title for the 11 Reports with

Pending Final Action at Start of Period

Report

Date

3/30/2018

Report 546: Audit of SEC's Compliance

with the Federal Information Security

Modernization Act for Fiscal Year 2017

Report 549: The SEC Made Progress But 9/11/2018

Work Remains To Address Human Capital

Management Challenges and Align With

the Human Capital Framework

Status of Final Action

Final Action Completed: 5 Reports/ Pending at End of Period: 6

Reports

Nineteen of the report’s 20 recommendations have been closed

with OIG’s concurrence. Completion of corrective actions on the

remaining recommendation is anticipated in fall 2023.

Final action taken during reporting period.

Report 552: Fiscal Year 2018 Independent 12/17/2018 Final action taken during reporting period.

Evaluation of SEC’s Implementation of the

Federal Information Security

Modernization Act of 2014

Report 559: The SEC's Office of BrokerDealer Finances Provides Effective

Oversight, But Opportunities To Improve

Efficiency Exist

2/26/2020

9/30/2020

Report 562: Opportunities Exist To

Improve the SEC's Management of Mobile

Devices and Services

Two of the three recommendations have been closed with OIG

concurrence. The SEC’s Division of Trading and Markets has

completed corrective action on the remaining recommendation

and anticipates closure by the end of summer 2023.

Three of the seven recommendations have been closed with

OIG concurrence. Corrective actions addressing the remaining

four recommendations are in progress, with anticipated

completion by the end of calendar year 2023.

Report 563: Fiscal Year 2020 Independent 12/21/2020 Five of the seven recommendations have been closed with OIG

Evaluation of SEC's Implementation of the

concurrence. OIT anticipates completion of the two remaining

recommendations in fall 2023.

Federal Information Security

Modernization Act of 2014

Report 568: Additional Steps Are Needed 9/29/2021

For the SEC To Implement a Well-Defined

Enterprise Architecture

Final action taken during reporting period.

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Report No./Title for the 11 Reports with

Pending Final Action at Start of Period

Report

Date

Status of Final Action

Final Action Completed: 5 Reports/ Pending at End of Period: 6

Reports

Report 570: Fiscal Year 2021 Independent 9/29/2021

Evaluation of SEC's Implementation of the

Federal Information Security

Modernization Act of 2014

Four of the report’s eight recommendations have been closed

with OIG’s concurrence. As of May 1, 2023, corrective actions

addressing three recommendations have been completed, two

of which are being prepared for submission for OIG review in a

formal request for recommendation closure. One

recommendation was under OIG review for closure. Corrective

actions addressing the remaining recommendation are in

progress, with anticipated completion in summer 2023.

Report 571: Registered Investment

Adviser Examinations: EXAMS Has Made

Progress To Assess Risk and Optimize

Limited Resources, But Could Further

Improve Controls Over Some Processes

1/25/2022

Final action taken during reporting period.

Report 572: The SEC Can Improve in

Several Areas Related to Hiring

2/28/2022

As of May 1, 2023, ten of the report’s eleven recommendations

were closed with OIG’s concurrence. Corrective actions on the

remaining recommendation have been completed and

submitted for OIG review in a formal request for

recommendation closure.

8/30/2022

Report 573: OASB Complied With

Statutory Requirements But Can Improve

As It Matures

Final action taken during reporting period.

All management decisions for the listed reports were made during prior reporting periods. For the

5 reports listed in Table 1 for which final action was taken during the reporting period, none of the

reports involved any questioned costs or recommendations that funds be put to better use.

Section 5(b)(4)(A) of the Inspector General Act states that a report may be excluded from the list of

reports pending final action if (i) a management decision was made on that report within the

preceding year or (ii) the report is under formal administrative or judicial appeal or management

has decided to pursue a legislative solution. In this report, the SEC did not exclude any such reports

from this list.

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