Question

AUDIT REPORT AND OTHER REPORTS FROM GENERAL MOTOS 10K IN 2019

• What are the amounts of audit fees and non-audit fees paid for the 2019 services?
• Does the annual report or proxy statement contain a "Management's Report on Internal?
• Controls over Financial Reporting" or similar report? If so, briefly describe the information

contained in that report?

• Does the annual report package contain an "Audit Committee Report"? If so, briefly describe it?
• the information contained in that report?

Does the annual report package contain CEO and CFO certifications required by Sarbanes-Oxley? If so, briefly describe the information contained in those certifications?

Answer 1

What are the amounts of audit fees and non-audit fees paid for the 2019 services?

USD millions	Year 2019
Audit fees	31.0
Non-audit fees	12.3
Audit-related assurance services	11.0
Services relating to corporate finance transactions	0.3
Tax related services	0.3
Other non-audit services	0.7
Total fees	43.3

The Audit Committee annually reviews the audit fees as well as any fees paid to the external auditor for non-audit services based on recommendations by the Group CFO.

Does the annual report or proxy statement contain a "Management's Report on Internal Controls over Financial Reporting" or similar report?

The Sarbanes-Oxley Act requires that the management of public companies assess the effectiveness of the internal control of issuers for financial reporting. Section 404(b) requires a publicly-held company's auditor to attest to, and report on, management's assessment of its internal controls.

The auditor's objective in an audit of internal control over financial reporting is to express an opinion on the effectiveness of the company's internal control over financial reporting. Because a company's internal control cannot be considered effective if one or more material weaknesses exist, to form a basis for expressing an opinion, the auditor must plan and perform the audit to obtain appropriate evidence that is sufficient to obtain reasonable assurance about whether material weaknesses exist as of the date specified in management's assessment. A material weakness in internal control over financial reporting may exist even when financial statements are not materially misstated.

The internal control report must include:

• a statement of management's responsibility for establishing and maintaining adequate internal control over financial reporting for the company;
• management's assessment of the effectiveness of the company's internal control over financial reporting as of the end of the company's most recent fiscal year;
• a statement identifying the framework used by management to evaluate the effectiveness of the company's internal control over financial reporting; and
• a statement that the registered public accounting firm that audited the company's financial statements included in the annual report has issued an attestation report on management's assessment of the company's internal control over financial reporting.

.

Does the annual report package contain an "Audit Committee Report"?

The Audit Committee (AC) is delegated with the authority from the Board to provide independent oversight of the Group’s financial reporting and internal control systems, and the adequacy of the external and internal audits. The AC is provided with sufficient resources to perform its duties including support, as necessary, from the Internal Audit Department (IAD), the external auditor, legal counsel and management in examining all matters relating to the Group’s adopted accounting principles and practices, and in reviewing all material financial, operational and compliance controls.

An audit committee report includes dashboard reports on current activities, annual plan changes, the status of the annual audit plan, and red-flag items or concerning trends. Also, an audit committee report includes the internal audit staff requirements, impact of limited resources and budget-cost comparison for the year. The audit committee report should include the results of any special investigations and a scorecard for department performance. The board will expect to see summaries on quarterly reports that have the most findings and other aggregated reports. Finally, audit committee reports should include information on monitoring and follow-up activities and the financial values of any issues of fraud.

Audit committees are responsible for reviewing the results of the audit with management and the external auditors. Committee members also review any matters that they’re required to share with management and external auditors as required by generally accepted auditing standards. Audit committees are responsible for appointing external auditors, setting their compensation and overseeing their work. CPAs report to the audit committee rather than management. Committee members should set controls over financial reporting, have assurance of information technology security and be familiar with operational matters. At audit time, audit committee members meet with the external auditors to discuss any private matters. Committees will review their approach to the audit and take steps to coordinate the audit with the internal audit staff. Internal audit committees review and approve the audit plan, review staffing and organization, and meet with internal auditors and management on a periodic basis to discuss pertinent issues.

Does the annual report package contain CEO and CFO certifications required by Sarbanes-Oxley?

The Sarbanes-Oxley Act of 2002, Section 302, “Corporate Responsibility for Financial Reports,” requires the CEO and CFO of publicly traded companies to certify the appropriateness of their financial statements and disclosures and to certify that they fairly present, in all material respects, the operations and financial condition of the company. But CEOs and CFOs already provide assurances to the auditor in the auditor’s Management Representation Letter, and frequently attach a Management’s Responsibility for Financial Reporting Letter in the corporation’s annual report.

During an audit, management makes many representations to the auditor, both oral and written, in response to specific inquiries or through the financial statements. These representations are part of the evidential matter that independent auditors are required to collect to support the auditor’s overall opinion. Because some representations are obtained only through inquiry, an auditor usually asks the CEO and CFO for a written letter to confirm representations explicitly or implicitly given to the auditor, under the guidance in SAS 85, Management Representations. This written representation letter is to be addressed to the auditor and signed by those members of management with overall responsibility for and knowledge about, directly or indirectly, the matters covered by the representations. Such members of management normally include the CEO and CFO, and others with equivalent positions in the entity.

Sarbanes-Oxley Act, section 302, “Corporate Responsibility for Financial Reports,” states that the CEO and CFO of each issuer shall prepare a statement to accompany the audit report to certify that “based on such officer’s knowledge, the financial statements, and other financial information included in the report, fairly present in all material respects the financial condition and results of operations of the issuer as of, and for, the periods presented in the report.”

The new requirement will be incorporated into the Securities Exchange Act of 1934. New Exchange Act Rules 13a-14 and 15d-14 will require an issuer’s principal executive and financial officers to each certify, with respect to the issuer’s quarterly and annual reports filed or submitted under section 13(a) or 15(d) of the Securities Exchange Act of 1934, that the individual has reviewed the report, and based on her knowledge, the report does not contain any untrue statement of a material fact or omit to state a material fact that might make the statement misleading. It must also certify that, based on her knowledge, the financial statements and other financial information included in the report fairly present in all material respects the financial condition, results of operations, and cash flows of the issuer for the periods presented.

The CEO and CFO could face significant penalties if they certify that the company’s books are accurate when they are not. The executives could face up to a five-year prison sentence, fines, and other disciplinary action such as civil and criminal litigation, as well as being barred by the SEC from ever serving as a corporate officer or director. Perhaps this “legal” responsibility, the basic premise that any wrongdoing will not go unpunished, will raise the stakes for those who would mislead investors and the public. Consequently, now that executives are being held personally responsible for their companies’ financial statements, they must worry more than ever about their personal bottom lines. Indeed, a growing number of CEOs are researching legal ways to shield their money and property from shareholder lawsuits and federal prosecution. This is a complete reversal from how securities fraud cases used to be handled. Until the accounting scandals caused investors to distrust corporate America, a fraud case could be resolved by paying the fine out of the company’s coffers. In some cases, shareholder lawsuits accusing companies of fraud could be settled using money from an insurance policy. Executives rarely had to pay out of their own pockets.