The quarterlies (10-Q’s) aren’t audited. The annual statements (10-K’s) are.

Because the quarterlies aren’t audited, they allow for a bit more “interpretation” on the part of management. They don’t have an auditor’s opinion because they aren’t audited.

GM’s fiscal year is based upon a calendar year (January – December.) So the statement as of 12/31 will be audited, unlike this one.

Typically, managers negotiate with auditors over the language and content of their findings. Accountants and ratings agencies have to compete for business, so nobody wants to be too hard assed, lest they lose clients over it.

But with all of the blame being tossed at accountants and ratings agencies these days (unfairly, in my opinion), accountants are shifting into CYA mode. You can expect much tougher audits this year than you’ve seen in awhile, as the fear of legal consequences takes priority over fears of losing clients.

The fit will hit the shan during the year end, when the bad news gets shifted into high gear, because it won’t hidden as easily as it was during the quarterlies. This is true for all sorts of companies, not just GM, but GM has become the bad news story of the year and this year-end nuke will surely get lots of attention when it goes off.

If the Japanese played that card, we would simply play the “lawsuit” card, followed by the “American automotive company start up boom” card, and then the “thanks for playing” card.

Any strategy that ends up with the American public getting angry is a loser. I am quite sure the Japanese are aware of this concept.

Help me out here: Does their 10Q filing say that they are a going concern or not? If the auditor is stating that they are still a viable enterprise (against all reasonable analysis that they are), aren’t they opening themselves up for the mother of all lawsuits if/when things go even further south? I’m thinking the obvious parallel is Arthur Anderson & Enron. What am I missing here?

GM is advising investors and the public, through their 10Q, that their auditors have expressed doubts as to their viability as a company.
This is probably a compromise hashed out in collaboration with the auditors, in lieu of the auditors making the statement themselves. Wouldn’t be surprised if it clears the auditors – but it’s just smokes and mirrors.

if you, americans stop buying american cars and let detroit big 3 collapse then japanese will overcome and rule your car market… which means you can only buy toyota, honda, nissan, mazda only, so from this position they will increase prices and you’re going to fill up the japanese car manufacturers pocket. is this the real american dream?

Don’t know about Europe but here many of us do the following math. Toyota @ $25,000 and dependable for 10 years = $2500/year. Detroit Iron @ $20,000 dependable for 5 years = $4,000/year.

That is a great simplification since if you keep a car until new purchase becomes cheaper than repair the actual numbers might be Toyota 15 years and Detroit 7 years.

With the non Detroit manufactures starting to save pennies wherever it is possible foreign dependability will start to fall.

Bullshit.

Just like “no one would fly on an airline in bankruptcy”, right? Give me a break.

Look for the same disclosure from Ford.

Darned if I can understand why the UAW hasn’t long advised its members to avoid buying GM and Ford stock. Isn’t a union supposed to serve the best interests of its members? For several years, GM and Ford stock has been a game for speculators and suckers.

They need to have the congress filled with a sense of urgency to get financing approved, but they want to keep the public in the dark as long as possible to keep up sales.

Politically, the Dems need to hang the issue on Bush before he gets out of the White House so it looks like they are cleaning up his mess. Obama gets the credit for helping out the workers while Bush gets the blame and Rick keeps his golden parachute ready for action.

The Auditors get to pull the trigger on the “ongoing concern” statement if Congress fails to act, so it adds additional pressure on the lame ducks to act quickly and not force many concessions from the General in return.

Wonder how all those institutional investors are going to explain their lack of responsibility in managing their investment in GM once they finally file?

Supposedly “independent” auditors and analysts who ignored or buried the bad news about companies they are hired to examine played a big part in the current market contraction and economic slowdown.

Bargain hunters, will however, buy the liquidated vehicles at fractional-pennies on the MSPR…

A hunch: I’m guessing there are literally tens of thousands of GM employees and retirees who have significant positions in GM stock and cannot emotionally bring themselves to sell. (Maybe they can’t believe that GM won’t prosper again; maybe they’ve watched all their savings evaporate on paper and can’t bring themselves to make it final.)

Does anyone know if there is data on this available?

What this statement says is that GM can’t officially say it can’t pay without losing its ability to borrow the money that has enabled it to get this far.

In other words, an official announcement that they can’t pay back their loans would immediately force them to cease operations.

The consequences aren’t stated to be this bleak. It merely says that their costs to borrow would go up. But, let’s face it, they’ve got to already be very high. How much more could they afford to pay?

It sounds like GM’s current lenders are pursuing a “don’t ask, don’t tell” policy. As long as GM doesn’t officially admit it cannot pay back the loans, they’re somehow willing to keep pretending that it can.

In this case, GM may be crazy like a fox. I can’t remember if it was here, or Bloomberg, or the NY Times recently, but somewhere it was stated that the proposed multi-gazillion dollar bailout package from D.C had some strings.

In a rare and surprising moment of common sense, the Honorables evidently decided that the rescue money could only go to companies believed to be a going concern or capable of continuing for the forseeable future.

For all the carping and whining seen here (TTAC) recently about what the gum’mint should or shouldn’t do with “our” money, I find it refreshing that Congress at least realizes it should fund companies with some chance of using the money productively.

If GM declares itself NFG, then they take themselves to the sidelines while the money is about to flow. I read the weasel wording in the 10Q as an attempt to remain in-bounds during play.

Game on!

But they’re good at the smokes&mirrors game, and have managed to pull off the pretense that they are a going concern.

They are saying that if the auditors label them as failures, that will make it so, because they will be in default of their credit agreements.

@thalter
Appearances are everything. There are very few businesses that don’t have major loans enabling operations, and their credit rating and status decides the terms of their loans.

If an auditor states as indicated above as far as GM is concerned, GM’s rating goes to somewhere south of nadir, where toilet paper swims.

We know GM is worthless, we’ve known that for years, and still they’ve been in “business”. It’s when the market finds out that GM is in real trouble, and that’s what’s happening now.