PPG reached a settlement with the U.S. Securities and Exchange Commission (SEC) in an investigation over the company's reported financial statements. As part of the settlement, which does not include a financial payment, PPG will fire its controller and restate its financial results, the Pittsburgh Post-Gazette reports.
PPG disclosed in January that the U.S. Attorney’s office was investigating the accounting matter, which impacted financial reports from December 2016 through April 2018.
“We are pleased to have resolved this matter with both the SEC and [U.S. Attorney’s office] without any financial or other penalty,” Michael McGarry, PPG’s chairman and chief executive, said in a statement. “As we move forward, our focus remains on our unwavering adherence to our core standards including financial integrity, which must and will remain a top priority and a focus for all PPG employees.”
In April 2018, PPG said its internal reporting system had identified errors in its first-quarter results and it was investigating improper procedures. Several weeks later it fired its controller, Mark C. Kelly, and reassigned other employees who were directed by him to adjust the results.
According to the SEC, Mr. Kelly and his subordinates “exploited deficiencies in PPG’s internal accounting controls” to misclassify or delay recognition of expenses and liabilities. They also overstated income in certain fiscal quarters, the SEC said. There were 14 instances of “intentionally erroneous” entries that reduced PPG’s pretax income by $6 million for 2016 and 2017, the SEC said.