Better times behind them, General Motors announced their intention to restate their profit figures, for years 2000 through the first quarter of 2005, that have already been reported. There is an indication that the car giant used highly questionable accounting methods in 2000, because profits fell sharply in the following year. GM made this announcement on the eve of filing its annual report that has already been delayed.

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“I think this will make investors skittish,” S&P equity analyst Efraim Levy told Reuters. He felt these embarrassing missteps by GM were embarrassing for an industry with a previous reputation of being “pretty clean and transparent.” These restatements may also complicate GM’s efforts to sell a majority stake in GMAC in order to raise cash and the credit rating of its financing arm.

Changes are expected to raise GM’s stated losses by $2 billion but not affect cash flow. Supplier discounts, previously reported but unearned in 2000 and 2001, are resulting in $548 million in deferred credit. Pretax profit in 2006 and beyond, will be that much higher, as the credits were wrongly taken before and available again, according to Reuters. The Wall Street Journal reports that GM’s 2005 loss will be increased to $10.6 billion.

“You have to question what controls are in place. When companies like GM are profitable, there is not a need in aggressive accounting. What we are seeing now is a pattern of very aggressive accounting that took them well beyond the limits of generally accepted accounting principles,” Charles Mulford, an accounting professor at Georgia Tech, told the New York Times.

GM had its hands full with strategic negotiations this last weekend. The New York Times reports that union negotiators, representing the United Automobile Workers (UAW) and Delphi, met last weekend with GM negotiators to discuss buyout packages for UAW workers at Delphi, that was spun off in 1999. GM retained the responsibility for retirement benefits of those workers. Their liability was initially stated as zero to $11 billion, but has now been revised to $5.5 billion to $12 billion.

The New York Times reports that the company invented tracking stock in the mid-1980s with the acquisition of Electronic Data Systems and Hughes Aircraft. These tracking stocks are supposed to trade, based on the profits of the acquisitions. The profits of these companies were said to be overstated because GM ignored good will charges, but no changes were ever made.

The changes now seem to stem from an argument with its auditors, Deloitte & Touche, on which the firm has declined to comment, according to the New York Times. Also, the replacement of CFO John Devine by Frederick Henderson was announced weeks after reporting that accounting errors had been discovered that would be detailed in their annual report.

On the positive side of this embarrassing situation that could potentially affect the company’s future, Jerome York, GM’s newest director, is dealing with these situations in a straightforward manner. He asked, “Why leave it to the union to communicate with our workers?” and urged executives to send GM news and negotiating positions to workers’ homes, directly. The Wall Street Journal reports that he reviewed financial statements with the CFO also and met with company labor-relations executives to get a clearer view of GM’s negotiations with the UAW.

The 67-year-old former auto executive has the backing of billionaire Kirk Kerkorian, holder of nearly 10 percent of GM’s shares. York has a rich incentive to bring GM out of its current situation. The Wall Street Journal reports his contract states that he is entitled to four percent of any gains from Kerkorian’s sizable investment in GM, translating to $2.2 million for each $1 increase in GM’s share price. There is no shortage of incentive for York, as GM’s share price has dropped 9 percent since he was named as a director in early February.

York helped Chrysler and International Business Machines turn their corporate situations around. Outside directors are seeking him to set the tone and agenda for GM’s responses to their current problems. One topic of a recent meeting with human resources was how executives’ performance was evaluated, according to Wall Street Journal.

David Cole, chairman of the Center for Automotive Research, told the Wall Street Journal, “GM has mixed feelings about Jerry. He can be helpful and scary.”