This is the accessible text file for GAO report number GAO-03-933R 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. This text file was formatted by the U.S. Government Accountability Office (GAO) to be accessible to users with visual impairments, as part of a longer term project to improve GAO products' accessibility. Every attempt has been made to maintain the structural and data integrity of the original printed product. Accessibility features, such as text descriptions of tables, consecutively numbered footnotes placed at the end of the file, and the text of agency comment letters, are provided but may not exactly duplicate the presentation or format of the printed version. The portable document format (PDF) file is an exact electronic replica of the printed version. We welcome your feedback. Please E-mail your comments regarding the contents or accessibility features of this document to Webmaster@gao.gov. This is a work of the U.S. government and is not subject to copyright protection in the United States. It may be reproduced and distributed in its entirety without further permission from GAO. Because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately. 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]