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entitled 'Securities and Exchange Commission: Management's Report on 
Internal Control Over Financial Reporting and Certification of 
Disclosure in Exchange Act Periodic Reports' which was released on June 
25, 2003. 

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United States General Accounting Office: 
GAO: 

June 25, 2003: 

The Honorable Richard C. Shelby: 
Chairman: 
The Honorable Paul S. Sarbanes: 
Ranking Minority Member: 
Committee on Banking, Housing, and Urban Affairs: 
United States Senate: 

The Honorable Michael G. Oxley: 
Chairman: 
The Honorable Barney Frank: 
Ranking Minority Member: 
Committee on Financial Services: 
House of Representatives: 

Subject: Securities and Exchange Commission: Management's Report on 
Internal Control Over Financial Reporting and Certification of 
Disclosure in Exchange Act Periodic Reports: 

Pursuant to section 801(a)(2)(A) of title 5, United States Code, this 
is our report on a major rule promulgated by the Securities and 
Exchange Commission (Commission), entitled “Management's Report on 
Internal Control Over Financial Reporting and Certification of 
Disclosure in Exchange Act Periodic Reports” (RIN: 3235-AI66 and 3235-
AI79). We received the rule on June 5, 2003. It was published in the 
Federal Register as a final rule on June 18, 2003. 68 Fed. Reg. 36636. 

The final rule requires companies subject to the reporting requirements 
of the Securities Exchange Act of 1934, other than registered 
investment companies, to include in their annual reports a report of 
management on the company’s internal control over financial reporting. 

Enclosed is our assessment of the Commission’s compliance with the 
procedural steps required by section 801(a)(1)(B)(i) through (iv) of 
title 5 with respect to the rule. Our review indicates that the 
Commission complied with the applicable requirements. 

If you have any questions about this report, please contact James W. 
Vickers, Assistant General Counsel, at (202) 512-8210. The official 
responsible for GAO evaluation work relating to the subject matter of 
the rule is Thomas McCool, Managing Director, Financial Markets and 
Community Investment. Mr. McCool can be reached at (202) 512-8678. 

Signed by: 

Kathleen E. Wannisky: 
Managing Associate General Counsel: 

cc: J. Lynn Taylor: 
Assistant Secretary: 
Securities and Exchange Commission: 

Enclosure: 

Analysis Under 5 U.S.C. § 801(a)(1)(B)(i)-(iv) Of A Major Rule Issued 
By The Securities And Exchange Commission Entitled "Management's Report 
On Internal Control Over Financial Reporting And Certification Of 
Disclosure In Exchange Act Periodic Reports" 
(RIN: 3235-AI66 AND 3235-AI79) 

(i) Cost-benefit analysis: 

The Securities and Exchange Commission found that the aggregate annual 
cost of the final rule to be about $1.24 billion or $91,000 per 
company. 

(ii) Agency actions relevant to the Regulatory Flexibility Act, 5 
U.S.C. §§ 603-605, 607, and 609: 

The Commission prepared an Initial Regulatory Flexibility Analysis in 
connection with the proposed rulemaking. The preamble to the final rule 
contains the Final Regulatory Flexibility Analysis that complies with 
the requirements of the Act, including a description of and the number 
of small entities affected by the rule and the steps taken to minimize 
the adverse impacts on small entities. 

(iii) Agency actions relevant to sections 202-205 of the Unfunded 
Mandates Reform Act of 1995, 2 U.S.C. §§ 1532-1535: 

As an independent regulatory agency, the Commission is not subject to 
the requirements of the Unfunded Mandates Reform Act. 

(iv) Other relevant information or requirements under acts and 
executive orders. 

Administrative Procedure Act, 5 U.S.C. §§ 551 et seq. 

The final rule was issued using the notice and comment procedures found 
at 5 U.S.C. 553. On October 30, 2003, the Commission published a Notice 
of Proposed Rulemaking in the Federal Register. 67 Fed. Reg. 66208. The 
Commission received over 200 comments in response to the notice that 
are discussed in the preamble to the final rule. 

Paperwork Reduction Act, 44 U.S.C. §§ 3501-3520: 

The final rule contains several information collections that are 
subject to review by the Office of Management and Budget under the 
Paperwork Review Act. The Commission estimates that the total 
incremental burden associated with the new internal control evaluation 
and disclosure requirements for all companies to approximately 
3,792,888 hours of company personnel time and a cost of $481,013,550
for the services of outside professionals. 

The estimated incremental burden for the certification requirements is 
117,048 hours annually. 

Statutory authorization for the rule: 

The final rule is promulgated under the authority contained in sections 
5, 6, 7, 10, 17, and 19 of the Securities Act, as amended; sections 12, 
13, 15, 23, and 36 of the Exchange Act; sections 8, 30, 31, and 38 of 
the Investment Company Act, as amended; and sections 3(a), 302, 404, 
405, and 906 of the Sarbanes-Oxley Act. 

Executive Order No. 12866: 

As the rule was promulgated by an independent regulatory agency, it is 
not subject to the review requirements of the order. 

[End of correspondence]