The PPG case is based on public documents on an earnings management scheme perpetuated by its controller, Mark Kelly. The scheme included several improper accounting adjustments from the fourth quarter of 2016 to the first quarter of 2018. In most quarters, Kelly’s objective was to meet or beat the consensus estimate for non-GAAP earnings.

In completing the case requirements, students are exposed to non-GAAP earnings, improper accounting of several transactions/events, and the motivations behind such accounting. The next section provides instructors with a summary of non-GAAP earnings that can be used for classroom discussions or to create student handouts. These teaching notes then provide suggested solutions to the case requirements. A grading rubric used by one of the authors is included in Exhibit (1). Instructors can modify the rubric to suit specific requirements assigned to their class.

Non-GAAP earnings are known by various labels, including adjusted, recurring, core, cash,...

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