Bloomberg News/Landov
Paint maker PPG Industries Inc. has fired its controller and reassigned employees after it found additional accounting errors worth millions of dollars and said its investigation into alleged violations of its accounting policies continues.
PPG said that errors pertained to the first quarter and would result in a $7.8 million net decrease in income from continuing operations before taxes. Additional errors may be identified, the company said.
Shares of PPG fell more than 3% in the late session Thursday, after ending the regular trading day down 0.9%.
In addition to the first-quarter mistakes, the company has also found “improper” reclassifications of gains from income from discontinued operations to income from continuing operations. Those errors totaled $2.1 million, pre-tax, in the second quarter of 2017 and $4.7 million in the fourth quarter of 2017.
“The investigation has found evidence that the improper accounting entries were made by certain employees at the direction of the company’s former vice president and controller,” PPG said in a statement.
The former vice president and controller was put on administrative leave on April 25, and his employment terminated on Thursday, it said. Two employees who acted under his direction have been reassigned to different positions, it said.
As a result of the continuing investigation, the company has told regulators it’d be late filing its first-quarter report, PPG said.
The investigation has also unveiled “improper” shifting of pre-tax expenses between quarterly periods in 2017.
“The investigation is continuing and there is no assurance that additional items will not be identified. The company does not intend to provide additional updates on the results of the investigation until it is concluded or the company determines that further disclosure is appropriate or necessary,” PPG said in its statement.
The company also said its 2017 financial statements included in its annual report “should no longer be relied upon.”
PPG launched the accounting investigation last month.
Also in April, the company said it expected to book charges of up to $85 million in the second quarter as it cut about 1,100 jobs in the U.S. after losing a contract with Lowe’s Cos. to sell its Olympic brand paints and stains later this year.
Shares of PPG have lost 1.6% in the last 12 months, which contrasts with gains of more than 13% for the S&P 500 index and an 18% advance for the Dow Jones Industrial Average.