Similar to many companies, GM was victimized by the economic crisis triggered in late 2008 by collapsing housing prices and the implosion of the subprime sector of the mortgage industry. That crisis quickly spread to other sectors of the U.S. economy, including the large automotive industry. Panic and fear caused millions of distraught U.S. consumers to delay or cancel "big-ticket" discretionary expenditures, such as purchases of new automobiles.
Well before the economic crisis that gripped the country in 2008 and 2009, GM's financial condition had been deteriorating. The generous pensions that the company historically paid to its former workers and executives, such as Billy Durant, were a key factor that contributed to GM's declining health. Wage freezes implemented during World War II by the federal government had prompted many companies, including GM, to establish an employee pension plan-or expand an existing one-to give their employees a legal pay "raise." The retirement benefits provided by those pension plans became increasingly lucrative during the latter half of the twentieth century due largely to the effective negotiation skills of such labor unions as the United Auto Workers (UAW).
The large expenses stemming from GM's pension plan and other postretirement benefit plans added significantly to the company's cost of producing automobiles.
Because foreign competitors such as Toyota paid more modest wages and provided their employees with less liberal pension and other postretirement benefits, they could produce automobiles more cheaply than GM. Over time, this economic disadvantage caused the annual sales of GM to shrink as car buyers gravitated to foreign models.
In 2009, Toyota finally overtook GM as the world's largest automobile producer.
Easily one of the most controversial issues surrounding GM's financial problems in early 2009 was what would happen to the company's huge and significantly underfunded pension plan if the company failed. Nearly 500,000 GM retirees or surviving spouses received monthly pension payments financed by the company. The majority of those individuals relied on their GM pension as the principal source of their retirement income. Likewise, the approximately 250,000 active GM employees had built their retirement plans around the pension benefits promised to them by their employer. What frightened GM's retirees and employees was that the present value of the liabilities associated with GM's pension plan were estimated to exceed $100 billion while the pension plan had total assets of only $85 billion. As the company tottered on the verge of bankruptcy, it was unclear how, or whether, the pension plan would be salvaged if the company filed for bankruptcy.

Questions
1. Auditing standards don't specifically discuss the audit procedures that should be applied to a client's pension-related financial statement amounts. Identify five audit procedures that would be relevant to those items. For each audit procedure that you list, identify the related audit objective.

2. What do professional auditing standards suggest is the overarching objective that auditors hope to accomplish by retaining an outside expert to assist them in completing an engagement? How could an expert be useful in auditing a client's pension-related financial statement items?
3. Do you believe that Deloitte behaved properly by accepting GM's decision to apply a 6.75 percent discount rate to its pension liabilities? What, if any, other steps or measures should Deloitte have taken under the circumstances?
4. Did the choice of the 6.75 percent discount rate in 2002 have a material impact on GM's financial statements? Defend your answer.