Securities and Exchange Commission
Office of Inspector General

OIG HOTLINE — CALL 1-877-442-0854 (see below)

Audit Reports, Semiannual Reports to Congress,
and Other Documents

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Introduction

The Commission established the Office of Inspector General in March 1989 as required by the Inspector General Act of 1978, as amended (the Act). The mission of the Office is to increase the likelihood that objectives, set by the Commission and management, are achieved. The Office's primary functions are to 1) perform audits of Commission operations, programs, activities, functions, and organizations, and 2) conduct investigations of alleged staff (and contractor) misconduct.

In accordance with the Act, the Office is independent of Commission management and independently decides which matters it will audit and investigate. The Chairman, however, appoints the Inspector General and appraises his/her performance.

Internal Audit Program

Large cabinet agencies with subsidy, grant, loan, or major contracting programs require an external audit focus. Because the Commission does not have such programs, the Office's audits focus primarily on internal operations. Consequently, the audits are less adversarial and more supportive than might be appropriate in audits of external organizations. The Office performs audits as a service to Commission management. The audits also function as a management control by evaluating other controls. Audit reports concentrate on practical solutions to problems, rather than assigning blame. The reports are considered the means to an end, not as an end in themselves.

Audits are not staff performance evaluations, which are the responsibility of management, but rather are designed to improve operations. Audit scope, objectives, findings, and recommendations are discussed with the audited organization in the belief that a constructive, team approach to auditing develops practical recommendations and facilitates their implementation.

Audit objectives usually include evaluations of one or more of the following:

• Accomplishment of goals and objectives;
   
• Economic and efficient use of resources;
   
• Compliance with policies, procedures, laws, or regulations;
   
• Accuracy, reliability, and integrity of management information;
   
• Adequacy of management controls; and
   
• Safety of assets.

The audit process involves:

• Reviewing pertinent policies, procedures, laws, and regulations;
   
• Identifying Commission objectives and goals;
   
• Comparing practices with Commission expectations;
   
• Observing operations and interviewing staff;
   
• Examining records and files;
   
• Surveying users' satisfaction with outputs;
   
• Testing management controls; and
   
• Comparing results with objectives.

In addition to being distributed to the managers responsible for taking corrective actions, audit reports are available to the public. These audit reports, semiannual reports to congress, and several other documents generated by the Office are available online, as well as upon request. Audit results are also summarized in the Inspector General's Semiannual Reports to Congress.

Internal Investigation Program

The Office of Inspector General is responsible for investigating allegations of staff and contractor misconduct. Commission staff should contact the Office directly, either orally or in writing, with allegations or complaints of suspected misconduct. Complainants are protected from reprisal under the Inspector General Act, as well as other statutes (e.g., the Whistleblower Protection Act). Employees should notify the Office of Inspector General of any retaliation or they can contact directly the Office of Special Counsel (202/254-3670 or 800/872-9855), which administers the Whistleblower Protection Act. The Office zealously pursues any interference with its investigations.

The Office has jurisdiction to investigate allegations of a wide variety of administrative, civil, and criminal misconduct. For example, investigations of alleged lying (about time and attendance, on travel vouchers, to a supervisor, etc.), conducting unauthorized business or other activities from Commission offices or computers, and theft or misuse of money or property have been conducted. The Office has also investigated alleged violations of trust, such as conflict of interest and unauthorized disclosure of non-public information.

During an investigation, the Office collects and analyzes evidence, including documents and witness testimony, from a variety of sources. The Office may use its statutory authority to subpoena documents and administer oaths as necessary. Technical experts (e.g., FBI crime labs, contractors) may be used to analyze evidence when needed. Subjects of investigations receive written notice of their rights before questioning.

To protect the rights of staff, the Office strives to keep its investigations confidential to the extent possible. The Office takes numerous precautions to protect complainants and witnesses, as well as subjects, and ensure a fair and objective investigation. Commission staff have been very cooperative in providing information to the Office, reflecting their concern for maintaining the Commission's integrity.

An investigation is not, by itself, proof of misconduct. When the evidence developed substantiates the allegations, the Office refers the matter for possible disciplinary action or prosecution, but does not itself take such action. The Office generally does not come to a conclusion as to guilt or innocence, and makes no recommendation as to sanctions or actions to be taken. Administrative matters are referred to Commission management officials, the Office of General Counsel, and the Office of Human Resources. Civil and criminal matters are referred to the Department of Justice, local prosecutors or other appropriate authority.

Commission staff are responsible for reporting fraud or other misconduct affecting Commission programs and operations. The Office accepts written or oral complaints, as well as anonymous allegations (although investigations are usually more effective if the complainant can provide specific information or documents upon request).

Hotline

To report suspected fraud, waste or abuse in SEC programs or operations, or to make a complaint about misconduct by Commission staff or contractors, call the OIG hotline toll free at 1-877-442-0854, or file a complaint online at www.reportlineweb.com/sec_oig/.

Contact

To obtain general information about the Office of Inspector General and its audit and investigations programs, please contact us at:

Securities and Exchange Commission
Office of Inspector General
100 F Street, NE
Washington, DC 20549-2736
Phone: (202) 551-6061
FAX: (202) 772-9265
E-Mail: oig@sec.gov

If your complaint is about a financial professional or is an investment-related matter, you may file a complaint online, or call the Office of Investor Education and Advocacy at (800) 732-0330 or (202) 551-6551.