Check Engine: GM Controls "Ineffective"

General Motors disclosed that its internal controls over financial reporting are currently "ineffective."

In its annual report, the struggling automaker warned that its financial condition and ability to carry out its strategic business plan could be adversely affected.

GM elaborated that its management team for financial reporting, with the participation of its chief executive officer and chief financial officer, evaluated the effectiveness of the design and operation of its internal controls. They concluded that as of December 31, GM's disclosure controls and procedures and its internal control over financial reporting were not effective.

"Although we have made and are continuing to make improvements in our internal controls, if we are unsuccessful in our focused effort to permanently and effectively remediate the weaknesses in our internal control over financial reporting over time, it may adversely impact our ability to report our financial condition and results of operations in the future accurately and in a timely manner, and may potentially adversely impact our reputation with stakeholders," the company warned.

The newly disclosed problems are but the latest embarrassments for the automaker's finance department. In the past year, GM has twice restated its financials back to 2002; the company also delayed filing its 2006 results.

In December, GM appointed Nick Cyprus as its new controller and chief accounting officer.