The FT has reported:

General Electric agreed to pay $50m on Tuesday to settle civil accounting fraud charges by US regulators, calling into question the conglomerate’s legendary ability to deliver consistent earnings growth.

The settlement with the Securities and Exchange Commission — which accused GE of bending the “accounting rules beyond breaking point” — involves a relatively small payment.

The SEC’s action concludes its probe into GE but does not preclude charges against individuals. Under the settlement, GE did not admit or deny the SEC’s allegations that it used improper accounting methods to increase earnings or revenues and avoid negative results on four occasions in 2002 and 2003.

In a statement, GE said the accounting errors “fell short” of its standards. But the conglomerate added it was “committed to the highest standards of accounting” and had cooperated with regulators throughout the four-year probe.

That was there view. There was another:

“GE bent the accounting rules beyond the breaking point,” said Robert Khuzami, director of the SEC’s division of enforcement.

The allegations were serious:

The four accounting errors alleged in the SEC’s civil complaint boosted GE’s earnings by more than $780m during the period, the regulators said.

In 2003, the SEC alleged GE changed its accounting approach to hedges related to its commercial paper programme in a way that enabled it to avoid missing analysts’ expectations.

The other alleged accounting violations included a failure to correct an error related to interest rate swaps, a decision to report sales of locomotives that had not yet occurred, and an “improper” change to accounting for sales of aircraft engines and spare parts.

I admit I’ve long time had a problem with GE’s sanctimonious attitude towards tax where it likes to march round European tax events appearing to be the big principled player: the myth is shattered guys.

But let’s put this in the tax context for a moment. A tax director is often told to deliver a tax rate for the accounts. I know: a number  have told me so. They are not constrained on how to deliver it, they just must.

So, how do they do that? Two ways: first buy some pretty dodgy tax structures. The Guardian published a few from Barclays earlier this year. They’re far from alone in playing this game, of course. Back these up with a legal opinion (the US has proved the lack of worth in these, but they keep the auditors happy). Then, second, book at least some of the benefit in your accounts. Not all, mind you: you’ll claim risk requires you to be cautious.

Two things on this second stage. First, with luck you won’t be around when the risk crystallises, so what the heck? Second, it’s a lovely way of adding to that little pot of ‘smoothing’ provisions that all accountants love to review when it comes to delivering earnings when the economic reality of a period does not deliver what you expected.

Have no doubt at all there are some companies who love having ten or more years of accounts open with the tax authorities: the opportunities this gives for manipulating the current and deferred tax charges are enormous. Of course, deferred tax is the ultimate pot for this purpose.

But the opacity in this can hide something else: deliberate falsification of results. Do you think that does not happen when a fixed tax rate is demanded? I can’t see see how not.

And isn’t this smoothing now alleged to be fraud? Doesn’t GE prove this?

If so — how many tax directors who have been playing games could face real risk of being accused of manipulating results? Quite a lot, I’d suggest.

Which makes the fines the Revenue can now impose for not keeping a system in good order look like small beer.

Time for someone at the SEC to take a serious look at tax accounting I suggest — it’s long overdue. And it’s a hornet’s next waiting to be exposed.