General Motors is set to pay $1 million in civil penalty fines for not notifying accountants of a proposed recall.<\/p>\n
Back in Spring of 2012, the company were aware of a potential safety recall, but reportedly failed to let accountants know. This failure prevented accountants from assessing the financial impact the recall may have, including any potential losses. This information was allegedly kept from accountants for around 18 months, though it is unclear whether this was intentional or an expensive oversight.
\n
\nThe American multinational corporation based in Detroit has agreed to a cease and desist order, all the while remaining silent on committing any wrong-doing.<\/p>\n
The recall was of a potentially deadly ignition switch failure which allegedly caused 124 reported deaths. The ignition switch could cut off power to airbags; preventing the safety devices from deploying when needed. The dangerous and potentially fatal defect led to a huge strain on the company\u2019s finances, with billions reportedly being paid out for various fines and claims.<\/p>\n
“Internal accounting controls at General Motors failed to consider relevant accounting guidance when it came to considering disclosure of potential vehicle recalls”. Andrew M. Calamari, Director of the SEC’s New York Regional Office.<\/p>\n
GM Co.’s omission breached the U.S.’ Security Exchange Act, which requires stock issuers to have significant internal accounts controls. The million dollar fine will be paid to the U.S. Securities and Exchange Commission who issued a press release condemning GM Co.’s failure:<\/p>\n