Why Can’t You Trust General Motors’ Financials? Because GM Says You Can’t.

The Telegraph ^ | 8/20/2010 | Joann Muller

[bruinbirdman]

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.

In recent years, GM—a company traditionally run by bean counters— had a habit of restating its quarterly results long after the quarter had closed. In January 2009, GM settled a case filed by the Securities and Exchange Commission over the way it accounted for pensions and other

[Nip]

After just two profitable quarters?

Is this the same company, who under government direction, told its creditors to pound sand while giving the union controlling interest?

Why should I trust then with anything but a Bronx cheer with this kind of recent activity?

[bruinbirdman]

This is an Obama Motors campaign ploy.

"See, Obama has sold half his shares with proceeds going to U.S. taxpayers."

yitbos

[Upstate NY Guy]

So after decades of mismanagement and deceit and billions in bailouts they admit they still can't be trusted to report honestly about their financial condition. They report they are making huge profits but then admit they don't even know if they are making a profit.

GM must die.

[gakrak]

Amen and Amen. I wouldn't trust the Union and Gov’t motors with the price of a cup of coffee.

[stevem]

Is this the same company, who under government direction, told its creditors to pound sand while giving the union controlling interest?

Before the bail-out they were losing money on every sale. What have they changed so that is no longer the case i.e. what expense did they eliminate?

They eliminated many distribution points, meaning franchises. Were those franchises harming the bottom line? I believe the franchise operators in my neighborhood pay their own expenses.

Are they selling exponentially more cars these days than they were before?

Any investor that trusts Obama to put out reliable numbers in an IPO should see me. I have vacation land on Europa I'm willing to let go at a reasonable price.

[castlegreyskull]

I really do not believe that their sales are up at all. I think many Americans are deliberately avoiding buying GM. I could be wrong, I know I wouldn’t buy one, as well as everyone in my family, I have a lot of friends and collegues who won’t buy one either for the same reason.

[Chode]

will that be in the prospectus???