Where is Fraud Likely? – Part 11: Window DressingBondBeebe
Lawrence R. Beebe, CPA
In this series, we are discussing specific areas where fraud might be likely to occur within an organization and the steps management can take to detect and prevent fraud.
Window Dressing Has Nothing to do With the Drapes in Your House
Window dressing refers to any action taken by an individual or individuals to make the financial statements look better than they actually are at the end of an accounting period by manipulating the numbers. Suppose that the accountant for a company hasn’t done a very good job of collecting receivables. As a consequence, the company’s cash balance is very low at year end and its accounts receivable balance is very high. The accountant holds open the cash receipts journal of the company and posts all receipts through January 10, as though they were collected in December. As a consequence, cash and the accounts receivable balance both “look better” at year end. The fix is only temporary, but the manipulating employee believes he will be able to work similar magic when the next set of financial statements is needed.
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