Forbes: Why Can’t You Trust General Motors’ Financials? Because GM Says You Can’t.
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August 20, 2010; Joann Muller writing for Forbes reported that with two profitable quarters under its belt, the “new” General Motors is preparing to seek new investors, the first step toward cutting its ties to the U.S. government.
The $3.8 billion it earned before interest and taxes in the first half of 2010 sounds OK, but you can’t trust the numbers. Why?
Because GM said so.
The most glaring of many disclosures contained in the 734-page IPO document is this warning on page 25:
“We have determined that our disclosure controls and procedures and our internal control over financial reporting are currently not effective. The lack of effective internal controls could materially adversely affect our financial condition and ability to carry out our business plan.”
The company goes on to say:
“Until we have been able to test the operating effectiveness of remediated internal controls and ensure the effectiveness of our disclosure controls and procedures, any material weaknesses may materially adversely affect our ability to report accurately our financial condition and results of operations in the future in a timely and reliable manner. In addition, although we continually review and evaluate internal control systems to allow management to report on the sufficiency of our internal controls, we cannot assure you that we will not discover additional weaknesses in our internal control over financial reporting.”
Say what?
That’s a bunch of legalese, but basically, GM is saying it can’t guarantee its reported results are accurate. And its auditor, Deloitte & Touche, agrees. But GM wants you to invest in the company anyway.