In a filing with regulators, General Motors said that ineffective internal controls over financial reporting might make it difficult for the company to execute on its business plan.
According to the carmaker, the control weaknesses include poor "maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the corporation," as well as failing to ensure that "receipts and expenditures of the corporation are being made only in accordance with authorizations of management and directors of the corporation."
In the filing of its 2006 results with the Securities and Exchange Commission, GM said that its management recognized the problems and is taking steps to correct them -- but declined to comment further on the matter.
It was more than a year ago that GM first revealed that the SEC had issued it subpoenas concerning accounting practices for pensions and other benefit programs, as well as an investigation into transactions between GM and Delphi Corp., the bankrupt auto-parts maker that was formerly a GM subsidiary. The U.S. Attorney's Office in Manhattan is also conducting a broader investigation into GM's accounting.
Last May, GM said that it had overstated its net income in 2001 by $405 million -- or 35 percent -- due to incorrectly recording supplier credits, mainly involving Delphi.
Analysts have said that more important than the control announcement is that the filing showed significant progress on the company’s turnaround plan, which is aimed at returning its North American auto operations to profitability.
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