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National Consumer News

GM to pay $1M penalty for ignition switch issue

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The SEC slapped GM with a $1 million dollar penalty for allegations the car maker violated accounting rules involving its ignition switch issue.

According to the SEC, GM accounting issues kept the company from accurately portraying the possible impact the ignition switch issue would have on GM’s financial statements.  The SEC found that an internal investigation alerted personnel of the safety issue in Spring 2012 but the company didn’t tell its accountants until November 2013.  That means there was an 18-month period where the auto maker failed to adequately evaluate the chance of a possible recall or losses from the issue.

“Internal accounting controls at General Motors failed to consider relevant accounting guidance when it came to considering disclosure of potential vehicle recalls,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.  “Proper consideration of loss contingencies and assessment of the need for disclosure are vital to the preparation of financial statements that conform with Generally Accepted Accounting Principles.”

GM did not admit or deny the SEC’s accusations.  Instead, it agreed to the finding it violated a section of the Securities Exchange Act  by not devising and maintaining a sufficient system of internal accounting controls.

Click here for the SEC’s announcement.

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