AP Parrots GM's Comparative Tease of Not Comparable 'Financials' Coming Monday

GovernmentMotors0609In the alternative universe known as Government/General Motors Land, you can:

  • Talk about how your financial results are going to be better than last year's and in the next breath caution that the numbers won't be comparable.
  • Inform the public that the financial information to be released on Monday isn't going to be prepared in accordance with generally accepted accounting principles (GAAP), and is going to simply skip about 3-1/2 months of activity that will apparently never be reported, even though your majority-owning government forces your publicly-held competitors and every other publicly-held company to prepare full-blown financial statements under those same GAAP rules.
  • Tell the world that you're a private company, even though the federal government owns a majority of your stock (in effect making you more of a public company than any other public company around), and thereby insist that you're doing the world a favor by releasing any financial information at all.

In the alternative reporting universe known as the Associated Press, you parrot these points without questioning whether they are correct, proper, or even less than fully transparent.

Here are key paragraphs from that Wednesday unbylined AP report (bolds after title and footnotes are mine):

GM to announce 3rd-quarter earnings on Monday

General Motors Co. said Tuesday that it will release its preliminary third-quarter earnings on Monday morning, the automaker's first earnings release since emerging from bankruptcy this summer.

The company is not expected to make a profit but has hinted that its results for the quarter will show a big improvement over the same period last year. (1)

.... GM last released a quarterly earnings statement in May, when it reported losing $6 billion in the first quarter of 2009. At the time, it was trying to stave off collapse and was staying afloat from infusions of government aid.

GM lost $2.5 billion in the third quarter of 2008 and a huge $30.9 billion for the entire year.

The company says the numbers it releases Monday cannot be compared with other quarters because they do not comply with U.S. accounting principles. (2) The period also is not a full quarter (3) as it covers only the period from its emergence from bankruptcy to Sept. 30.

.... As a private company, GM is not required to file financial updates, (4) but company officials have said they plan to continue to make regular disclosures. (5)

Following the footnoted bolds:

(1) and (2) -- How can a company get away with telling the world that its number will be better when they've admitted they won't be comparable? Answer: They can't, except in Government/General Motors Land. Shoot, there isn't even a "same period as last year" to discuss in the first place.

(3) -- How can AP headline its story as being about "3rd-quarter earnings" when the article content says the report isn't for a full quarter? Answer: It can't, and doesn't, unless it's taking stenography in Government/General Motors Land.

(4) and (5) -- Since when is it acceptable that the full-blown "financial statements" required of any company in which the investing public has an ownership interest are allowed to turn into mere "financial updates" and "regular disclosures," even though the entire taxpaying public has a vested interest in its government's majority ownership? Answer: Since we've arrived in Government/General Motors Land.

Other questions logically arise:

  • When, if ever, will we see financial results for the period GM was in bankruptcy? Will Motors Liquidation Company, the shell of old GM, file a report for April 1 - July 9 with the SEC, or will those financial results be buried in oblivion forever?
  • Will GM even attempt to tell us how its "accounting" differs from GAAP and roughly what GAAP income or loss would have been, or will we just forced to go "uh-huh" at whatever level of incomplete information the company and its government owners are willing to give us about its balance sheet, income and expense, and cash flow?
  • Are outside Big Four or other auditors involved at GM in looking over whatever passes for financial statements (oops, I meant "financial updates") to see if they're even reasonable or credible? If they are, what is their level of involvement, and do they have an opinion to issue on the financials? Oh, and when's the outside audit going to take place?

These and other questions never get asked, let alone answered, in AP La-La Land, while tens of billions of taxpayer dollars disappear down what has thus far been a bottomless money hole, and the press stands by with its collective mouth hanging open.

Cross-posted at BizzyBlog.com.

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