General Motors Corporation, the world's number 1 automaker and famous producer of quality is experiencing accounting problems which is causing the automaker delays in filing its annual report with federal regulators and was asking for extension after the Thursday deadline given to them. The world's largest automaker said in a filing with the US Securities and Exchange Commission that it would need until March 16 to finish everything in order to file.
According to GM spokeswoman Renee Rashid-Merem, "we're continuing to finalize the items we previously reported, and it became necessary to file an extension." GM said that last month it has completed its review of financial statement covering 2002 until late September 2006. The result of the automaker's financial review reveals an estimated deferred tax liability amounting to $1 billion and further stated that accounting changes involving interest rate fabrication will increase its retained earnings by about $200 million.
The accounting problems which include General Motors Acceptance Corporation or GMAC have caused the delayed in the automaker's released of its fourth-quarter and 2006 earnings. General Motors further stated that it would post its fourth-quarter profit. But for the meantime GM officials refused to reveal the size of the expected profit.
Pete Hastings an auto industry bond corporate analyst with Morgan Keegan & Co. Inc. in Memphis, Tenn., has commented that while the accounting troubles of GM may be persistent they are not a big concern compared to other issues that the automaker is facing like for instance the weakening auto sales and the upcoming contract talks with the UAW. He further added, "For a multinational corporation with fairly complex issues in front of them, I'm not altogether surprised at the delay."
It should be noted that GM has announced a loss amounting to $3 billion covering the first nine months of last year while $10.6 billion loss was recorded for 2005. The automaker is also facing problems with regards to dishonest accounting practices which have forced them to review all of their financial statements.
GM is also waiting for its financial arm the GMAC to close its books on 2006. It should be remembered that GM has sold 51 percent of its stake in GMAC to a group pf investors for $14 billion last year.
