General Motors has concluded that its internal controls on financial reporting are "ineffective," after a six-week delay in reporting 2006 results prompted by repeated accounting errors.
The world biggest automaker, which has restated results going back to 2002 twice over the past year, said in a filing with securities regulators that its financial reporting management team was working to improve internal controls.
"We have determined that our internal controls over financial reporting are currently ineffective," the company said in its annual filing with the Securities and Exchange Commission.
"If we are unsuccessful in our focused effort to permanently and effectively remediate the weaknesses in our internal control ... it may adversely impact our ability to report our financial condition ... accurately and in a timely manner," it said.
GM reported fourth-quarter results on Wednesday, March 14, after delaying them due to restatements and difficulties in accounting for the closing of the sale of a majority stake in its finance arm, GMAC.
The accounting problems are only the latest embarrassment for GM, which last year pledged to tighten its controls after restating six years of results and disclosing accounting probes by the SEC.
Ratings agency Standard & Poor's had warned that GM risked a downgrade if it missed the Friday, March 16, filing deadline for its annual report, saying the difficulties had raised concerns "about the integrity of the company's financial reporting."
GM appointed a new controller and chief accounting officer in December and has started a program to recruit, train and develop technical accounting personnel, it said in the filing.
The company has also appointed a new director of accounting policy, research and SEC reporting, it said.
The automaker is under investigation by the SEC on several matters, including financial reporting related to its pension accounting, transactions with suppliers including its former subsidiary Delphi Corp., and transactions in precious metals.
GM said in the filing that it would reorganize its tax department, restructure its corporate accounting unit, and improve period-end closing procedures.