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SEC urged to flesh out performance goals

Lawmaker finds regulatory agency’s five-year strategic plan low on substance.

A House lawmaker last week asked the Securities and Exchange Commission to refine its five-year plan for beefing up oversight of financial markets.

The SEC's management strategy for 2004 to 2009, completed in the summer, marks an improvement over past planning efforts, but focuses too heavily on "tactical" issues, said Rep. Todd Platts, R-Pa., in a Sept. 21 letter to SEC Chairman William Donaldson. "That is, the plan seems to be more of a recasting of existing activities and processes already occurring at the SEC, and there is no clear vision on how the agency can better fulfill its mission in the long term."

In the wake of corporate accounting scandals, Congress encouraged the SEC to take a more aggressive, proactive approach to fighting fraud and granted the agency a budget boost and extra hiring flexibilities. But until SEC officials provide more information about plans for improving oversight and tracking progress, lawmakers cannot determine if they've provided the appropriate resources, Platts said.

The SEC's five-year strategy, written to comply with the 1993 Government Performance and Results Act, lacks detail in three areas, Platts said. The plan provides only a surface-level look at how the agency will use a new risk assessment program to detect fraud, he said. SEC officials also failed to share details on how they intend to use the resources Congress recently provided, and the agency's description of steps to measure progress is "insufficient," Platts wrote.

SEC spokesman John Heine said Monday that agency officials don't discuss congressional correspondence.

In the five-year strategy, SEC officials noted that the agency would start up a risk assessment program and create an Office of Risk Assessment to identify "new or resurgent forms of fraudulent, illegal or questionable behavior" early, Platts wrote. But in describing the program, officials failed to detail the office's staffing arrangements, technological needs and relationship to other SEC divisions, he said.

The strategic plan outlined four generic goals for improving performance, including "applying technology," Platts wrote. The plan, however, lacked an analysis of the resources needed to meet these goals, he said.

"I am also concerned that the performance measures laid out in the plan provide insufficient information as to whether the SEC is achieving its goals," Platts wrote. The measures listed "read more like workload indicators than planned achievement levels."

Potential performance measures listed by SEC officials included: staff vacancies by program area; attrition rate for accountants, attorneys, examiners and supervisors; percentage of management and staff attending training programs; and percentage reduction in hours required to complete agency filings.

Platts asked the SEC to flesh out Office of Risk Assessment plans within 30 days of receiving the letter. He also urged agency officials to spend more time consulting and coordinating with counterparts at agencies sharing similar goals, including the Justice Department. The agency's most recent plan shows little evidence of coordination, he said.

'The SEC cannot be successful going it alone," Platts wrote. "Indeed, this nation cannot be successful with an SEC that goes it alone."