This is really priceless, and was called to our attention by Prof. Bainbridge (May 31): the Securities and Exchange Commission menaces publicly held companies with ruinous legal enforcement actions if their accounting controls fall short, even sometimes when the lapse arises through inadvertence. But according to a General Accounting Office report (GAO-05-244), its own house is in far from perfect order:

In GAO’s opinion, SEC’s fiscal year 2004 financial statements were fairly presented in all material respects. However, because of material internal control weaknesses in the areas of recording and reporting disgorgements and penalties, preparing financial statements and related disclosures, and information security, in GAO’s opinion, SEC did not maintain effective internal control over financial reporting as of September 30, 2004. (emphasis added)

Accounting watchdog, audit thyself!