Identify a company that was significantly impacted by the financial crisis which

Question

Identify a company that was significantly impacted by the financial crisis which exploded in 2008, this does not need to be a major company or a company that appeared in the headlines. Using this company as the basis for your analysis, evaluate whether meeting the requirements of external controls does/does not or can/cannot ensure the presence of adequate internal controls. Also consider whether the issue of regulatory convergence in the global marketplace has any role to play in the balancing of external and internal controls.

Explanation / Answer

The U.S., Europe, and Asia had this in common—car makers were at the head of the line of industries pleading for help. The U.S. Senate turned down $14 billion in emergency loans; the car companies got into this mess, senators argued, and it was up to them to get out of it. President Bush, rather than risk the demise of General Motors (GM) and Chrysler, tapped the $700 billion financial sector bailout fund to provide $17 billion in loans—enough to keep the two companies afloat until safely after the Obama administration took over in early 2009. In addition, the Treasury invested in a $5 billion equity position with GMAC, GM’s financing company, and loaned it another $1 billion. In Europe, Audi, BMW, Daimler, GM, Peugeot, and Renault announced production cuts, but European government officials were reluctant to aid a particular industry for fear that others would soon be on their doorstep. Even in China, car sales growth turned negative. As elsewhere, the industry held out its tin cup, but the government left it empty.

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