In the last 10 years, there have been a number of high-profile incidents in which companies have adversely impacted investors and their own profitability because of measurement error or measurement bias in financial statements and reports.

• Was the incident you chose an instance of measurement error or measurement bias? What action did the company take that resulted in error or bias?

In 2018 paint maker PPG Industrials Inc. found out that their vice president and controller was making employees report incorrect data on their financial statements from the end of 2016 to May of 2018 causing a measurement bias to occur. The company has found improper reclassifications of gains from income from discontinued operations to income from continuing operations (Assis, 2018). This incorrect reporting resulted in the company having an extra $7.8 million in income from continuing operations before taxes

• What were the consequences of the action?

The consequence of this action was that the company had to publicly state that their financial statements since the end of 2016 could no longer be reliable or accurate. When this was discovered it caused the companys stock price to plummet about 10%. They also had to find a new vice president and controller since they had to fire the previous one for making employees report incorrectly. They also lost the trust of investors which they would need to earn back by showing the proper steps were taken to rectify this issue.

• What steps, if any, did the company take to rectify the situation?

When PPG was informed of this incorrect reporting, they immediately informed the SEC and launched and investigation into their financial reporting. This discovery occurred right before a quarterly report was to be released so the company also informed the SEC that they would be delaying their reporting until the investigation could be completed. They hired outside counsel and forensic accountants to help the Audit Committee of the Board of Directors review all the financial statements in the past 2 years. The investigation resulted in the company finding many more errors and issuing corrections to all the statements where errors were found. During the investigation it was discovered that the vice president and controller was the one responsible for directing certain employees to conduct improper accounting. They fired him and moved the employees he was directing to different positions in the company where they would not have a role in the internal control over financial reporting nor its disclosure controls and procedures (PPG Inc., 2018).

• What steps might the company have taken to improve accounting quality?

In this case the only thing they could have done was to catch the error earlier and fire the person responsible for it. The only reason this error was identified is because the company received a complaint through its internal reporting system regarding how the company recorded certain expenses in its first quarter. Enacting a stricter internal reporting system may allow for the company to catch errors early instead of a year or more later. Stricter internal controls may also help prevent the error in the first place.

For chegg tutor, in your responses to the above post, confirm or challenge the above recommendations for improving accounting quality and offer additional recommendations. Discuss whether you think this may indicate a trend in regard to accounting quality (or a lack thereof). Ask question if need? Also, I am kindly asking to respond with no plagiarism