Board Should Enhance Compliance with Small Entity Compliance Guide Requirements Contained in the Small Business Regulatory Enforcement Fairness Act of 1996

Finding 2: Board Should Comply with SBREFA's Congressional Reporting Requirements

The Board has not submitted annual reports to the relevant congressional committees describing the status of the agency's compliance with paragraphs (1) through (5) in section 212(a) of SBREFA. The 2007 amendments to SBREFA created an annual congressional reporting requirement related to small entity compliance guides. To comply with this requirement, the agency head must submit to the Senate Committee on Small Business and Entrepreneurship, the House Committee on Small Business, and any other committee of relevant jurisdiction a report describing the agency's compliance with small entity compliance guide requirements.

Board Is Not Reporting the Status of Its Compliance to the Relevant Congressional Committees

We reviewed the Board's public reports to Congress listed on the Board's public website to determine whether the Board has provided the Senate Committee on Small Business and Entrepreneurship, the House Committee on Small Business, and any other committee of relevant jurisdiction a report describing the status of compliance with section 212(a) of SBREFA, as amended. We did not find any reports that had been provided to the relevant committees.

In its 2008 Annual Report to Congress, the Board reported that in August of that year, a small entity compliance guide was released for Regulation R, Exceptions for Banks from the Definition of Broker in the Securities Exchange Act of 1934, (12 C.F.R. § 218), which provided a general description of the regulation and contact information for small entities with questions regarding compliance. In our opinion, this 2008 report did not meet the annual reporting requirement because it did not provide the status of the Board's compliance with section 212(a) of SBREFA and was not directed to the appropriate committees. We requested, but did not receive, documentation from the Board evidencing that the annual congressional reporting requirement had been satisfied.

Recommendation

We recommend that the Board

2. Begin submitting annual reports to the relevant congressional committees, as required by section 212(a)(6) of SBREFA, as amended, that describe the Board's compliance with small entity compliance guide requirements.

Management's Response

The Board's General Counsel and the Director of the Division of Consumer and Community Affairs agreed with our recommendation. In the consolidated response to recommendation 2, the Board officials stated that they will confirm and ensure that the required reports on the Board's compliance with section 212(a)(6) of SBREFA are filed on a timely basis.

OIG Comment

In our opinion, the action described by the Board's General Counsel and Division Director is responsive to our recommendation. We plan to follow up on the Board's actions to ensure that the recommendation is fully addressed.