@Forbes: Bankruptcy Examiners and The GM IPO

I’m writing a new column at Forbes.com.  It’s called, “Accounting Watchdog” because traditional media is so innovative! Actually, I wanted to broaden my scope a little –  if going from Big 4 auditors to accounting, in general, can really be considered expanding my horizons.

But I do have, more or less, carte blanche to comment on whatever floats my boat regarding financial regulation, accounting standards, investor protection and the relationship between the audit industry and personal finance.

This week I covered the tough but extremely necessary job performed by the bankruptcy examiner.  They’re often the only ones who can get the auditors to talk.

Sometimes partners even spill the beans.

It’s easier to bring the Big 4 auditors to court than bring them to justice. They almost always settle.  They’d rather swallow their pride in preliminary court proceedings – auditors often claim the firm and its partners were “duped” – than try to prove their innocence to a jury.

Bankruptcies can sometimes provide the opportunity to shine a bright light on auditors’ negligence or complicity in frauds or failure.

I also wrote this week about the upcoming public offering of GM stock by the US government.  The US taxpayer owns a really big chunk of the car company as a result of their bailout.  The strategy is to sell some shares to a few suckers at a high price and show a profit on the “investment” rather than reduce the stake to de minimis at a market clearing price.

Good luck with that!

The U.S. government plans to sell the GM garbage barge back to investors after taxpayers poured $50 billion in to save it. GM will report final third-quarter figures on November 10th, a week ahead of its November 18th IPO. The company “projects” a third-quarter profit of between $1.9 billion and $2.1 billion, according to preliminary results the automaker released yesterday. It’s supposedly the third consecutive quarterly profit for post-bankruptcy GM but none of those numbers were audited and the financial statements included in the prospectus for the share offering are also unaudited.

I’m skeptical about any numbers GM issues, whether blessed by their auditor Deloitte or not.

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