Bad Bookkeeping

Started by Sue 5125, March 31, 2006, 09:53:09 AM

Previous topic - Next topic

Sue 5125

Another reason why GM may be in trouble - this article was in todays Detroit News:

A suppliers odyssey: To return $4M to GM

Billing-entry mistake on GMs end resulted in J.R. Industries receiving $1,988 -- 1,988 times.

Christine Tierney / The Detroit News

Jack Paulus of J.R. Industries didnt have to read General Motors Corp.s 10-K filing to learn that the automakers financial controls were spotty. He has spent a month trying to return $4 million that GM overpaid his machine-manufacturing firm.

Last December, GM commissioned J.R. Industries to design and build one diagnostic test stand to check engine valves and manifolds for $1,988. The company shipped the equipment at the end of January and billed GM $1,988 on March 2.

The mixup occurred when a GM employee keyed 1,988 into both the quantity and unit price columns.

Paulus, the owner of the Detroit business, called around the company but was reluctant to put a $3,950,156 check in the mail. He found a GM executive who met with him on Thursday and accepted the payment.

Did he think about just keeping the money? "I was tempted," Paulus told WDIV Local 4. "I was going to give a million dollars to Sweetest Heart of Mary School."

"What he did was wonderful," said GM spokesman Tom Wickham. "He has a great deal of integrity. You dont always hear good stories."

GM stunned investors this week with a raft of unsettling disclosures in its 10-K, ranging from new federal probes into accounting practices to the risk that it might have to renegotiate credit lines because of declining debt ratings. It also restated results for several years.

A $4 million repayment isnt likely to ease concerns about GMs ability to finance its $193.5 billion business. But, as the transaction occurred this year, it wont cause GM to restate any more results. TARGET=_blank>