Accounting & Tax

GM Receives Delphi-Related Subpoena

The auto-parts maker had previously acknowledged that it improperly accounted for $237 million in cash payments to General Motors in 2000.
Stephen TaubApril 15, 2005

General Motors has apparently been pulled into the Securities and Exchange Commission’s investigation of the accounting practices at Delphi Corp., the parts company that was formerly part of the auto giant.

Citing GM spokeswoman Toni Simonetti, The Wall Street Journal reported that the securities regulator has subpoenaed the company for documents related to certain transactions with Delphi. The SEC requested documents related to the commission’s probe of Delphi’s accounting for a number of transactions, including at least two with GM
in 2000 and 2001.

After finding accounting errors dating back to 1999, the year it was spun off from General Motors, Delphi previously acknowledged that it improperly accounted for $237 million in cash payments to GM in 2000. Delphi vice chairman and chief financial officer Alan Dawes subsequently resigned last month “after the audit committed expressed a loss of confidence in him,” according to a statement by the committee chairman at the time.

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“We are confident our accounting treatment was correct,” Simonetti told the Journal. She added that the company has reviewed its handling of the transactions with its audit committee but would not elaborate on the specifics of the SEC’s request.

Earlier this week the Journal reported on two transactions between GM and Delphi that it characterized as “questionable.” In one, a payment from Delphi helped GM beat analyst earnings estimates; GM did not disclose the payment to investors at the time, according to the paper.

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