Are remedial actions fully documented?
If our examiners cannot determine how a problem was corrected, they will wonder how your management is doing so. If our examiners determine that they can take some comfort from your in-house preventative systems, they may decide to limit their detailed testing of source documents and accounting records. Of course, you should also understand that examiners will continue to request many of the standard books and records, both to test check the implementation of your controls and to focus on particular areas where those controls appear to be weak. The auditors in the audience will be very familiar with the necessity for test-checking. In addition to conducting more risk-based examinations, we’re also continuing our focus on reviewing firms’ internal controls and risk management systems. As you may know, the SEC along with the NYSE and the NASDR issued a joint statement in July 1999 outlining our approach to these examinations and listing some examples of sound control practices, and some
