United States Government Accountability Office GAO November 2008 Report to the Chairman, United States Securities and Exchange Commission_part5 ppt

Financial Statements Page 41 GAO-09-173 SEC’s Financial Statements for Fiscal Years 2008 and 2007 Financial Section 65 sheet. Also effective in FY 2008, the SEC did not include receivables for amounts the SEC expects to distribute to the public or collections it expects to forward to the public in the Statement of Custodial Activity (SCA). The SCA only includes collections the SEC anticipates forwarding to the Treasury’s general fund. As the current presentation refl ects a change from one that was acceptable to another that is a preferred presenta- tion, prior period fi nancial statement and related information was presented as previously reported. Additional details regarding disgorgement and penalties and the SCA are presented in Note 1.U. Disgorgement and Penalties, Note 12. Earmarked, Disgorgement and Penalties, and Non-Entity Funds, and Note 16. Custodial Revenues and Liabilities. In the SEC’s FY 2007 Performance and Accountability Report, Note 4. Investments is presented differently to conform with reporting requirements in OMB Circular A-136. E. Use of Estimates The preparation of fi nancial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. These estimates and assumptions include the disclosure of contingent assets and liabilities at the date of the fi nancial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. F. Intra- and Inter-Agency Relationships The SEC does not have transactions among its own operating units, and therefore, intra-entity eliminations are not necessary. The SEC has certain oversight responsibilities with respect to the FASB, the Securities Investor Protection Corporation (SIPC) (refer to Note 11. Commitments and Contingencies), and PCAOB; however, these entities are not subject to consolidation. G. Fund Accounting Structure The SEC accounts for fi nancial activities by Treasury Appropriation Fund Symbol (TAFS), summarized as follows: • General Fund—Salaries and Expenses (0100 and X0100) consist of earmarked funds for use in carry- ing out the SEC’s mission and functions and revenues collected by the SEC in excess of appropri- ated funds for FY 2003 through FY 2004 (0100) and FY 2005 through FY 2008 (X0100) (refer to Note 1.H. Earmarked Funds, Note 3. Fund Balance with Treasury, and Note 12. Earmarked, Disgorgement and Penalties, and Non-Entity Funds). Other Funds: • Deposit and Suspense Funds (X6563, X6561, F3875, and F3880) carry disgorgement, penalties, and interest collected and held on behalf of harmed investors, registrant monies held temporarily until earned by the SEC, and collections awaiting disposi- tion or reclassifi cation. • Miscellaneous Receipt Accounts (1099 and 3220) hold non-entity receipts and accounts receivable from custodial activities that the SEC cannot deposit into funds under its control. These include amounts received pursuant to cases that the SEC will send to the Treasury. The SEC does not have lending or borrowing authority, except as discussed in Note 11. Commitments and Contingencies. The SEC has custo- dial responsibilities, as described in Note 16. Custodial Revenues and Liabilities. H. Earmarked Funds Earmarked funds are fi nanced by specifi cally identifi ed revenues, often supplemented by other fi nancing sources, which remain available over time. The SEC collects such funds, which statutes require the SEC to use for desig- nated activities, benefi ts or purposes; and to account for them separately from the government’s general revenues. The SEC accounts for these as offsetting collections and deposits amounts collected in TAFS 0100, Salaries and Expense as detailed in Note 12. Earmarked, Disgorgement and Penalties, and Non-Entity Funds. I. Entity/Non-Entity Assets Assets that an agency is authorized to use in its opera- tions are entity assets. Assets that an agency holds on behalf of another federal agency or a third party and are not available for the agency’s use are non-entity assets. The SEC’s non-entity assets include the following: (i) disgorgement, penalties, and interest collected or to be collected and held or invested by the SEC pending distribution to harmed investors (disgorgement funds); (ii) custodial accounts receivable; and (iii) excess fi ling fees remitted by registrants (registrant deposits). This is trial version www.adultpdf.com . estimates and assumptions include the disclosure of contingent assets and liabilities at the date of the fi nancial statements and the reported amounts of revenues and expenses during the reporting. the SEC expects to distribute to the public or collections it expects to forward to the public in the Statement of Custodial Activity (SCA). The SCA only includes collections the SEC anticipates. with respect to the FASB, the Securities Investor Protection Corporation (SIPC) (refer to Note 11. Commitments and Contingencies), and PCAOB; however, these entities are not subject to consolidation. G.