As the SEC goes about enhancing and expanding its oversight of FINRA using a more risk-based approach, it should conduct more extensive oversight of FINRA’s governance and executive compensation, according to a report by from the Government Accountability office.

The report, issued on Wednesday, highlighted several other shortcomings in the way that the SEC oversees the brokerage industry’s self-regulatory organization. The report comes at a particularly sensitive time, as House Financial Services Committee Chairman Rep. Spencer Bachus (R-Ala.) proposed legislation that would subject investment advisors to oversight by an SRO, and all eyes are on FINRA as the eventual SRO for advisors. If passed, critics say, investment advisors might incur costly regulations that modeled on the brokerage model.

The SEC should employ alternative approaches to oversight and monitor their effectiveness, the Government Accountability Office said. Further, the SEC has conducted routine inspections of FINRA’s advertising and arbitration programs, but not as frequently as it had planned.

Although the regulator has regularly reviewed FINRA-proposed rule changes to ensure that they align with the SEC Act of 1934, neither the SEC nor FINRA retroactively reviews them, the GAO says.

“GAO and others have reported on the usefulness of retrospective reviews as they allow agencies to assess the effectiveness of their rules,” according to the report. “Some federal financial regulators, including SEC, have begun pursuing plans to conduct retrospective reviews of their rules in light of a recent executive order that encourages independent regulatory agencies to do so.”

Not all of the report gave the SEC a negative critique. The GAO acknowledged that the SEC is in the process of improving the way it monitors FINRA. The SEC has collected a substantial amount of information on FINRA’s regulatory programs and operations.

Yet the agency has not shown how it would follow certain tactics that the GAO has found to be helpful, such as considering alternative oversight approaches and monitoring the effectiveness of its oversight.