U.S. Comptroller General David M. Walker, who heads the General Accounting Office, said staff shortages and high turnover at the SEC have weakened the regulatory process and must be dealt with to prevent future problems like those at Enron Corp.

"There is a growing mismatch between the SEC's responsibilities and their resources," Walker said. "The resources are not just financial resources. They are human resources as well as a need for a comprehensive and innovative plan to address these matters."

Walker commented during a Senate Banking Committee hearing at which the GAO released a report on the SEC's workload.. The report found that the SEC's lack of resources has caused delays in processing filings, issuing guidance and investigating fraud.

From 1991 through 2000, the number of cases opened by the SEC's enforcement division increased by 65 percent, from 338 to 558. Enforcement staff increased by 16 percent, from 414 to 482 "staff years," the report said.

The report also found that SEC's turnover rate for lawyers, accountants and examiners averaged 15 percent in 2000, more than twice the rate for comparable positions elsewhere in the government. About 250 SEC jobs were unfilled as of September.

But the GAO said that while the SEC tries to shift staff to address new priorities, that kind of "reactive approach can result in regulatory gaps."

SEC Chairman Harvey L. Pitt said in a letter to GAO responding to the report that SEC agreed with its conclusions. An SEC spokesman declined to comment beyond the letter.

The White House has proposed spending $467 million on the SEC in fiscal 2003, a 6.6 percent increase from the current fiscal year. Both Democratic and Republican lawmakers have called for a much larger increase. House Republicans have proposed up to $700 million and House Democrats up to $876 million.

Walker said yesterday that the SEC is part of a larger problem with the current system for regulating auditing, accounting and financial reporting, which he called "fragmented and not well coordinated."

The disciplinary system overseen by the American Institute of Certified Public Accountants is one example of the problem, Walker said.

"The AICPA's disciplinary function is to kick you out of the AICPA," he said. "Well, I'm a member of the AICPA, and obviously I don't want to be kicked out of the AICPA. On the other hand, if I get kicked out of the AICPA, it saves me some annual dues. I would hardly suggest that is an effective sanction."

Walker said he supports the SEC's plan to address the accounting issues raised by the failure of Enron, including establishing a regulatory group to replace the Public Oversight Board, the entity that had been responsible for discipline in the accounting business.

-- By Jackie Spinner