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PPG Ends Probe, Releases Updated Numbers

Monday, July 2, 2018

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Global coatings manufacturer PPG Industries (Pittsburgh) announced Thursday (June 28) that it has concluded an internal investigation within its accounting department after uncovering evidence of improper practices by a former controller.

The announcement came along with amended financial reports for the fourth quarter of 2016, all of 2017 and the first quarter of 2018, filed Thursday amid an ongoing investigation by the Securities and Exchange Commission. PPG fired a former vice president and controller, not named by the company but identified elsewhere as Mark C. Kelly, earlier this year after the company says an internal complaint alleged that he directed employees to incorrectly classify certain expenses without the knowledge of other senior company officials.

PPG Place
© iStock.com / JoeCollver

PPG Industries filed amended reports for 2016, 2017 and the first quarter of 2018 last week after wrapping up an internal investigation into alleged accounting improprieties by a former controller.

PPG disclosed the investigation into accounting practices when it filed its first-quarter report for 2018 in April, noting that the numbers in the filing would likely be amended. Kelly was placed on leave days later and fired May 10.

Amended 2016-18 Numbers

The initial findings related to expenses that were improperly accrued in Q1 of 2018, but PPG noted that it was looking into possible impropriety in 2017 as well. The new disclosure notes that the improper practices also affected numbers in late 2016.

Net income from continuing operations for both 2016 and 2017 decreased as a result of the amended filings, by $4 million and $2 million, respectively. Net income from discontinued operations increased by $5 million in 2017 due to the changes. Adjusted net income from continuing operations in the first quarter of 2018 has now been reported as $342 million, a decrease of $8 million in comparison with numbers reported in April.

The company said as a result of the investigation, which was conducted by auditor PricewaterhouseCoopers, it has already started to make changes to ensure similar issues won’t come up in the future.

“We have already begun to implement a remedial plan to address the issues identified by the internal report and the investigation, as more fully described in our filings today,” chairman and CEO Michael McGarry said in a statement. “We are committed to take actions that are consistent with our ethics and values and fully meet the expectations of both internal and external stakeholders. Unwavering adherence to our core standards of financial integrity and honesty remains a top priority and focus for all PPG employees.”

In an unrelated matter, PPG also disclosed Thursday that two other numbers in its first-quarter 2018 report should be adjusted: one related to legacy environmental remediation funds and one related to taxes.

PPG’s second-quarter earnings report is due out July 19.

   

Tagged categories: Asia Pacific; Coatings manufacturers; Earnings reports; EMEA (Europe, Middle East and Africa); Ethics; Finance; Latin America; North America; PPG; Program/Project Management

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