Gm to review its financial statements

Gm to Review Its Financial Statements

General Motors Corp., world’s largest carmaker and producer of quality auto parts like GM brake pad, GM brake rotors and many more, has recently turn up an extra $200 million in earnings which was part of their unaccounted earnings in between 2002 and 2006. The said amount was discovered after a complete review of the financial statements of the automaker was conducted as part of the company’s filing requirements with the Securities and Exchange Commission.

It can be remembered that General Motors has restated its earnings results seven times in the past two years and just recently it has announced that it may again file request for an additional 15-day extension of the March 1 SEC filing deadline. The automaker was initially scheduled to announce its 2006 results last January 30.

The reason for the 15 day extension requested by GM is that their previous financial statements are no longer reliable. The automaker also said that they need to conduct a complete review of their financial statements.

Likewise, according to GMAC, GM’s former finance arm said last Friday that it will need to restate financial results back to 2001 due to some accounting complications. For some time now General Motors has been trying to fix its accounting problems plus the delays in its accounting news. The automaker has also become a subject of almost half-dozen investigations by the SEC.

But despite the questions on the automakers finances, investors have remained undisturbed and focused more on the financial improvement that GM gained for 2006. They are also looking forward for a profitable fourth quarter with record revenue.

GM’s stock has also increased from a year ago, closing at $36.34 last Friday compared to its previous price at $18 last December 2005. Shares fell 10 cents or 27% in the trading that closes last Friday.

According to Frank Khoshnoud, a Southfield-based principal in the automotive practice of consulting firm Capgemini Group, “I don’ think its making people feel negative. Looking at a company the size of GM and given the complexities we have dealt with, it’s not what I would call an indication of any malpractice of their part.”

It should be noted that just last year General Motors has reported a $10.6 billion loss for 2005 that is after it has restated a result it previously issued. Many analysts are expecting strong results from the automaker for 2006 due cutting down measures it has implemented.

The GMAC has made things complicated for General Motors when it failed to supply the automaker with its needed information on time especially for the fourth quarter report. And because of this General Motors has decided to sell 51% of GMAC last November 30 to raise additional fund for the company.

GMAC said the restatement of GM’s financial statements covering periods between 2001 and 2006 will have a material impact on the automaker’s net income. The changes are expected to add or decrease about $230 million to the financial statement but won’t have any effect on the overall liquidity or cash flow of the automaker.

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