Wednesday, October 20, 2004
GM says it's confident that its financial reporting has been complete.
DETROIT (AP) -- General Motors Corp. and Ford Motor Co. said the Securities and Exchange Commission has asked them to provide information on their pension and retiree health care plans as part of an inquiry into how companies prepare estimates used to calculate pension costs.
The acknowledgments by the nation's two largest automakers Tuesday came a day after Delphi Corp., the world's largest automotive supplier, disclosed in a regulatory filing that the SEC had requested documents on its accounting related to pensions and retiree health benefits, which can affect the bottom line.
Confirming a report in BusinessWeek magazine, the SEC said its inquiry started with six companies it did not name. The SEC has no evidence of violations, but the companies were not selected randomly, said Lawrence West, an associate director of enforcement at the agency.
Complying
GM spokeswoman Toni Simonetti said Tuesday the automaker received a confidential request from the SEC on Thursday to provide information about its pension and post-retirement health care plans. Simonetti said the company was complying with the request.
"We're confident GM's financial reporting in this complex area has been accurate and complete," she said.
Ford chief financial officer Don Leclair acknowledged receipt of the SEC request Tuesday during a conference call with analysts and automotive journalists to discuss Ford's third-quarter earnings.
"Given the size of our pension and retiree health care obligations, I don't think it's surprising that a general SEC inquiry on these matters would include Ford," Leclair said. "We adhere to the highest accounting standards and will cooperate with the agency in this review."
Company pension plans are among several areas being examined in the SEC's new "risk-based inquiries" designed to anticipate problems that could lead to fraud and investor losses. Critics have suggested in recent years that some companies are using artificially high estimates of future rates of return on pension assets to lower their pension costs, thereby pumping up earnings.
The SEC is examining whether changes in pension plans can create so-called "cookie jar" reserves that could be dipped into to bolster revenues in less profitable times. The SEC maintains such a practice gives investors an inaccurate picture of a company's financial performance.
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