Car manufacturer General Motors ("GM") agreed to pay a $1 million penalty to settle SEC charges that GM had deficient internal accounting controls. This deficiency allegedly prevented GM from adequately assessing the potential financial impact of losses due to GM's recall of cars with defective ignition switches, and from disclosing such losses on the company's financial statements.
The SEC Order found that GM violated Securities Exchange Act Section 13(b)(2)(B) by failing to devise and maintain a system of internal accounting controls that could reasonably ensure the accurate recording of transactions in order to allow the preparation of financial statements that conformed to Generally Accepted Accounting Principles. Under the system of internal accounting controls that was in place from 2012 through the second quarter of 2014, the SEC Order stated, GM's internal accountants were not provided with all relevant information concerning potential recalls.
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