GM Admits Accounts Are Whacked
GM's annual report's out (just in time for the weekend!) and it's a shocker. The General's CEO, the company's former CFO, has admitted that the automaker's accounts are, how do we put this gently… unreliable. Here's the text: "Material weaknesses previously identified as of December 31, 2006 that continue to exist as of December 31, 2007: 1. Controls over the period-end financial reporting process were not effective. This has resulted in a significant number and magnitude of out-of-period adjustments to our consolidated financial statements and in previously reported restatements. Specifically, controls were not effective to ensure that significant non-routine transactions, accounting estimates, and other adjustments were appropriately reviewed, analyzed, and monitored by competent accounting staff on a timely basis. Additionally, some of the adjustments that have been recorded relate to account reconciliations not being performed effectively… 2. Controls to ensure our consolidated financial statements comply with IRS No, 109, Accounting for Income Taxes were not effective… 3. Controls over the accounting for employee benefit arrangements were not effective. We lacked sufficient control procedures as well as adequate involvement of technical accounting resources to ensure that employee benefit arrangements were accounted for properly." It's hard to grasp the full implications of this revelation. If GM severely over-reported its liquidity, the situation could be dire. Full Death Watch on Monday. [thanks to Buickman for the heads-up]
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WHO IS DELOITTE & TOUCHE? Deloitte, the same outfit that was auditor for Parmalat. Remember them, European conglomerate that imploded with a $5 Billion Cayman Island cash account that DID NOT EXIST? We've had the same audit company for over 70 years, hardly the appearance of an arm's length relationship. How about the Jersey car dealer McNamara who burned us for $400 Million in vans which did not exist? Where was Deloitte then? Deloitte was found guilty of dereliction of duty regarding Adelphia. Before anyone heard of Enron, Just For Feet, a Super Bowl ad running shoe store chain went from a market cap of $700 Million to ZERO in three years with Deloitte's accountants on watch. Deloitte's consulting arm hit the company up for business to fix it's internal control problems. Can you say "conflict of interest?" Instead of blowing the whistle, they sought additional business. WHO IS JOHN GALT? "But it cannot be done to you without your consent. If you permit it to be done, you deserve it. "You, who are half-rational, half-coward, have been playing a con game with reality, but the victim you have conned is yourself. When men reduce their virtues to the approximate, then evil acquires the force of an absolute, when loyalty to an unyielding purpose is dropped by the virtuous, it's picked up by scoundrels,and you get the indecent spectacle of a cringing, bargaining, traitorous good and a self-righteously uncompromising evil." Ayn Rand "Atlas Shrugged" Now ask yourself... WHO IS THE BIG FISH PULLING THE STRINGS ON RED INK RICK?
Golly, Buickman, I'm stymied. Who IS the big fish pulling the strings on red ink Rick? I'm guessing it's not J. P. Morgan (died 1913), Jacob Schiff (died 1920) or August Belmont (died 1924). Or Deloitte & Touche (audit firms have had to separate from their consulting arms). Or John Galt (fictional character). Or Mr. Powell of the Illuminati (he's more interested in triangles). So is it the Board of Directors, collectively, who is running GM into the ground?
the banksters blow GM into oblivion and reorg the pieces having dished legacy costs and union pay scale production. they privatize and refloat after having milked the cow down to nothing but a skeleton. how many Billions do you suppose are gone to the likes of Morgan, Deutsche, BOA, Merrill, and Sachs in interest and investment banking fees? who could ever have imagined Olds closing, GMAC being sold, Buick being starved to death intentionally, our ratings tanked, our dividends slashed, dealers shuttered, employees cut loose by the tens of thousands, retirees screwed out of their security, and customers leaving in droves? who could ever have imagined Toyota outselling Chevrolet in the USA and on pace to eclipse all of GM within the next two years? meanwhile, Red Ink Rick and the Board of Bystanders go about their merry way. I say throw the bum out and NOW!
If you look at the annual report, there was quite a lot of detailed explanation behind the accounting problems, two of which were disclosed in 2006, and are still problems today (maybe that's what got Levine's absence requested...) and the other is a problem with how to account for the UAW/IUE legal fund (whoda thunk those guys negotiated for free lawyers). I'm no accountant, so maybe someone can step up and explain what GM is saying in those paragraphs in the A.R., rather than....oh stop it, that will just get the post deleted...