General Motors has agreed to pay $1 million to settle SEC accounting control failure charges related to the company’s ignition switch scandal.
When automakers face a potential recall, they must assess the potential for a recall and give an estimation of what the potential financial loss could be. In a statement Wednesday, the SEC said that the giant automaker did not follow this procedure and therefore the company accountants could not factor in the potential impact of a recall into their financial statements.
“The SEC’s order finds that the company’s internal investigation involving the defective ignition switch wasn’t brought to the attention of its accountants until November 2013 even though other General Motors personnel understood in the spring of 2012 that there was a safety issue at hand. 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.
General Motors did not admit or deny the charges, but consented to the SEC’s findings that the company did not have a sufficient system in place.