Ex-PPG controller is penalized $100,000 by the SEC for accounting improprieties.

A former PPG controller and principal accounting officer has been ordered by the Securities and Exchange Commission (SEC) to pay $100,000 for accounting fraud that was intended to inflate the earnings per share of the Pittsburgh-based painting supply firm.

According to the SEC's judgment released on Friday, Mark Kelly was prohibited from working as an accountant at any public corporation without having the option to request his reinstatement. Kelly was fired by PPG in 2018 following an internal inquiry into his alleged behavior. In settling, Kelly did not accept or reject the agency's conclusions.

The SEC claims Kelly falsified profits between 2016 and 2018.

According to the SEC, PPG first noticed the discrepancies after they were reported to the company's hotline in April 2018. Later, the business revealed in a press release that it had discovered overstated spending for the first quarter of 2018.

The audit committee of PPG's board of directors, outside counsel, and a forensic accountant conducted an inquiry that revealed the company's 2018 earnings had been overstated by $1.4 million and other inaccuracies in 2016 and 2017. The corporation disclosed its errors in updated Forms 10-K it submitted to the SEC.

PPG was the subject of a joint investigation by the SEC and the Department of Justice that ended in 2019.

Kelly was found to have knowingly broken agency standards involving falsifying books and records, according to the SEC's inquiry. According to the ruling, his actions led to an increase in the company's earnings for the fiscal years ended December 2016 and December 2017.

According to the SEC, Kelly attempted to violate generally accepted accounting standards (GAAP) by giving the impression that the company would achieve its profits consensus projections for those years.

Kelly instructed subordinates to incorrectly record or ignore recording expenses, such as legal bills, property taxes, and performance-based compensation, from December 2016 to April 2018. The SEC discovered that his staff misclassified income from continuing operations as well as adjusted income from continuing operations.

PPG told the SEC in its restatements that Kelly instructed people reporting to him to improperly circumvent internal controls. Other senior management members and PPG's auditor were not informed of these measures.

PPG inflated income on its Forms 10-Q that it submitted in four quarters in 2016 and 2017, according to the SEC, as a result of Kelly's misbehavior. The SEC discovered that PPG's second-quarter 2017 Form 10-Q overstated income by more than $10 million.

According to the agency's ruling, Kelly "took advantage of PPG’s insufficient internal accounting controls and circumvented PPG’s policies and procedures that were designed to ensure appropriate financial reporting and disclosure."

PPG did not respond to a request for comment.

By fLEXI tEAM