General Motors To Pay $1M Over Ignition Switch Accounting Issues

Image courtesy of (Paul Pica)

General Motors’ years-long ignition switch debacle has cost the carmaker billions of dollars in penalties, settlements, and compensation. Today, the Securities and Exchange Commission added $1 million to the hefty tab.

The SEC announced Wednesday that GM agreed to pay a $1 million penalty to resolve allegations that it violated accounting rules involving the carmaker’s ignition switch fiasco, which has been linked to at least 124 deaths.

According to the SEC, deficient internal accounting controls prevented the company from being able to determine there was potential for a recall related to the ignition switches.

When a recall or safety issue is discovered, companies, like GM, are required to assess the likelihood of whether the potential recall will occur, and provide an estimate of the associated loss.

The SEC’s investigation found the company’s defective ignition switch wasn’t brought to the attention of accountants until Nov. 2013, despite the fact that GM personnel know in the spring of 2012 that a safety issue was present.

“Therefore, during at least an 18-month period, accountants at General Motors did not properly evaluate the likelihood of a recall occurring or the potential losses resulting from a recall of cars with the defective ignition switch,” the SEC said in a statement.

While GM agreed to the settlement, it did not admit or deny the charges.

“Since the ignition switch recall, GM has been proactively and successfully resolving ignition switch issues with customers and regulators at both the state and federal level,” the carmaker said in a statement, noting that since the recall began, GM reorganized its vehicle engineering teams for greater transparency, urgency, and accountability.

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