NEW YORK (Reuters) - General Electric Co reinforced its defense of its accounting practices on Monday after investors asked more questions about an unusual research report last week that accused the jet engine and power plant maker of financial fraud.

FILE PHOTO: The General Electric Co. logo is seen on the company's corporate headquarters building in Boston, Massachusetts, U.S. July 23, 2019. REUTERS/Alwyn Scott/File Photo

The 175-page report www.gefraud.com, published on Thursday by Harry Markopolos, who blew the whistle on Bernard Madoff's Ponzi scheme, renewed concern about GE's finances and sent its stock tumbling.

“Some of (the) questions I’ve been receiving go straight to the heart of GE’s culture, so let me be clear: we operate with absolute integrity and stand behind our financial reporting,” Steve Winoker, GE’s investor relations chief, said in a statement on Monday.

Investors are nervous about GE because the Boston-based conglomerate is expected to lose as much as $1 billion in cash this year, has slashed its dividend and profit forecast and taken more than $40 billion in charges and write-offs in recent years.

Among the biggest shocks to investors, GE said in 2017 that it would set aside $15 billion for long-term care insurance payouts, one of the largest such amounts ever.

GRAPHIC: GE's Long-Term Plan -

Markopolos said GE would need to put aside an additional $29 billion for insurance losses, and that it had improperly counted profit from oil and gas services subsidiary Baker Hughes.

A Reuters article in March found that GE’s reserves were then in line with other insurers, but some experts said GE would need to set aside $12 billion more because its estimates relied on optimistic assumptions.

GE’s shares fell as much as 15% after Markopolos’ report came out, recouping much of the decline on Friday. On Monday, GE shares were down 1.4% at $8.67 in afternoon trading.

In response to the concerns about insurance, Winoker said on Monday that the amount of GE’s long-term care payouts would be determined “over decades, not years,” and that GE uses “rigorous testing,” “sound actuarial analysis” and follows “regulatory and accounting” rules.

Addressing the Baker Hughes questions, Winoker said accounting rules require GE to include the subsidiary’s results in its earnings reports because it is the majority shareholder.

GE disclosed in 2018 that its accounting was being investigated by the U.S. Securities and Exchange Commission and the Department of Justice. It also is the subject of a class-action shareholder lawsuit that alleges fraud in GE’s insurance and other accounting.

Winoker, who covered GE as an analyst at UBS before taking his current job in January, said investors’ questions about Markopolos’ report prompted GE to comment on Monday, but did not say how many questions GE received or characterize them.

SHORT PROFITS

Markopolos said in the report that he stood to share in profits from a hedge fund that sold GE shares short before the report came out, a bet that the share price would fall.

Short sales of GE shares rose by about $995 million in the month before Markopolos’ report came out, according to S3 Partners, a New York financial analytics firm.

GE Chief Executive Officer Larry Culp said last week that Markopolos’ report was “market manipulation - pure and simple” - a reference to Markopolos’ potential to profit from short-selling timed to the report.

Culp and Leslie Seidman, chair of GE’s audit committee, said Markopolos did not talk with GE before issuing his report. GE said Culp, Seidman and other GE directors and executives bought shares after the report came out.

GE said in the statement on Monday that it has not under-provisioned for long-term care insurance, which pays for assisted living and nursing home care for policy holders. Such policies have pushed some insurers into financial trouble, and even bankruptcy, because the costs have turned out to be much higher than were assumed when the policies were written in the late 1990s and early 2000s.

GE is now only a reinsurer of such coverage and says it has not written new long-term care policies since 2006.

Markopolos’ report said GE needs to add $18.5 billion to reserves now because it has underestimated its potential claims, and will need to add a further $10.5 billion when new accounting rules take effect in 2021 or 2022.

Regarding Baker Hughes, GE said on Monday that the company’s assets and income are correctly included in GE’s financial reports because GE owns 50.2%, down from 50.4% last year.

Markopolos said GE is double-counting because it does not in practice direct activities at Baker Hughes.