Audit of the SEC’s Student Loan Repayment Program - government program to pay off student loans

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Audit of the SEC's Student Loan
Repayment Program
March 31, 2016
Report No. 534
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
OFFICE OF
INSPECTOR GENERAL M E M O R A N D U M
March 31, 2016
TO: Jeffery Heslop, Chief Operating Officer
FROM: Carl W. Hoecker, Inspector General
SUBJECT: Audit of the SEC's Student Loan Repayment Program, Report No. 534
Attached is the Office of Inspector General's (OIG) final report detailing the results of our audit
of the U.S. Securities and Exchange Commission's (SEC) student loan repayment program.
The report contains nine recommendations for corrective action that, if fully implemented,
should strengthen the program.
On March 11, 2016, we provided management with a draft of our report for review and
comment. In its March 25, 2016, response, management concurred with our
recommendations. We have included management's response as Appendix II in the final
report.
Within the next 45 days, please provide the OIG with a written corrective action plan that
addresses the recommendations. The corrective action plan should include information such
as the responsible official/point of contact, timeframe for completing required actions, and
milestones identifying how the Office of Human Resources will address the recommendations.
We appreciate the courtesies and cooperation extended to us during the audit. If you have
questions, please contact me or Rebecca L. Sharek, Deputy Inspector General for Audits,
Evaluations, and Special Projects.
Attachment
cc: Mary Jo White, Chair
Andrew Donohue, Chief of Staff, Office of the Chair
Michael Liftik, Deputy Chief of Staff, Office of the Chair
Nathaniel Stankard, Deputy Chief of Staff, Office of the Chair
Michael S. Piwowar, Commissioner
Jaime Klima, Counsel, Office of Commissioner Piwowar
Kara M. Stein, Commissioner
Robert Peak, Advisor to the Commissioner, Office of Commissioner Stein
Anne K. Small, General Counsel
Timothy Henseler, Director, Office of Legislative and Intergovernmental Affairs
John J. Nester, Director, Office of Public Affairs
Lacey Dingman, Chief Human Capital Officer, Office of Human Resources
Kenneth Johnson, Chief Financial Officer, Office of Financial Management
Darlene Pryor, Management and Program Analyst, Office of the Chief Operating Officer
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL
Executive Summary Audit of the SEC's Student Loan
Repayment Program
Report No. 534
March 31, 2016
Why We Did This Audit What We Found
Federal agencies may repay employees' The SLRP Program Office in the SEC's Office of Human Resources (OHR)
qualifying student loans for the purpose administers the agency's SLRP. In 2014 and 2015, OHR implemented
of recruiting or retaining highly qualified significant changes to the program, including migrating to an automated
personnel. According to annual reports application processing system, a rolling application period, and immediate
to Congress, between July 2003 and eligibility for new employees. We did not identify SLRP benefits awarded
December 2014, the U.S. Securities to employees who failed to meet minimum performance standards during
and Exchange Commission (SEC or the period reviewed. However, we identified internal controls weaknesses
agency) provided over $47 million in impacting the SLRP Program Office's ability to effectively manage the
student loan repayment benefits, program. Although OHR provided SLRP benefits to retain SEC
making the SEC one of the Federal employees, Program Office personnel did not (1) maintain complete and
agencies that consistently uses student accurate participant information, (2) implement or enforce effective
loan repayments the most. Specifically, approval and verification controls, or (3) update the SEC's SLRP policy
during those 12 years, the SEC
and ensure the policy complied with certain Federal requirements. A prior
provided an annual average of about
Office of Inspector General audit, an Office of Personnel Management
$3.9 million in student loan repayment
evaluation, and an internal OHR assessment identified similar issues.
benefits to an annual average of about First, we determined that SLRP Program Office personnel could not
473 employees. If internal controls over completely and accurately identify in a timely manner all employees who
the SEC's student loan repayment received SLRP benefits and the amount paid to each between July 2003
program (SLRP) are not designed or and June 2015. As a result, we were not able to determine whether the
are not operating effectively, benefits SEC always complied with statutory annual and lifetime SLRP limits
may be improperly awarded to ($10,000 and $60,000, respectively). Furthermore, Program Office
employees and the SEC may not personnel did not maintain a list of those employees who did not fulfill their
identify or collect former employee
service agreements and may be required to repay benefits received.
debts.
Although we verified that the SEC either collected or was collecting
repayments from 95 former employees, Program Office personnel were
unaware of 17 other individuals who left the SEC and Federal service
between January 2007 and June 2015 before fulfilling their service
What We Recommended agreements. Those 17 individuals owed the SEC a total of about
To improve the SEC's management of $216,000.
its SLRP, we made nine In addition, SLRP Program Office personnel did not always implement or
recommendations for corrective action. enforce effective approval and verification controls. Specifically, we noted
The recommendations included inconsistencies in some applicants' loan account numbers, loan
maintaining complete and accurate verification documents, and loan balances. In many instances, there was
records of SLRP participants, improving no evidence that Program Office personnel resolved these inconsistencies
controls to reduce the likelihood that before approving payments. Consequently, in some cases, we could not
ineligible employees receive SLRP determine whether the Program Office erroneously approved SLRP
benefits and to identify and collect payments. Furthermore, SLRP Program Office personnel did not enforce
former employee debts, updating the the SEC's requirement that employees confirm that loan holders received
SEC's SLRP policies, and addressing SLRP payments and properly applied them to employees' accounts.
issues raised in prior reviews. We also Finally, we determined that the SEC's SLRP policy (dated September
determined that the SEC could improve 2009) does not reflect the agency's current program or include certain
its SLRP Loan Data Verification Form, Federal requirements. Although between April and July 2015 OHR
and reported this matter to management published various guides and administrative notices announcing changes
for consideration. Management in the SEC's SLRP, the agency's SLRP policy conflicts with these
concurred with the recommendations, documents and provides inaccurate and unreliable information to SEC
which will be closed upon completion employees and their supervisors. During our audit, OHR drafted, but did
and verification of corrective action. not issue, a revised SLRP policy.
For additional information, contact the Office of Inspector General at
(202) 551-6061 or http://www.sec.gov/oig.
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