Have a good day to all. Can anyone explain please according to IAS 10 what is window dressing while preparing financial reports? I need answers specially from finance professionals.Thanks

Window dressing refers to actions taken or not taken by the companies and financial managers in order to improve the appearance of the financial statements and to show more favorable results for a period.

These actions are generally taken shortly before the end of an accounting period and prior to issuing financial statements. 

Window dressing is illegal, fraudulent and usually done to mislead investors and lenders.

Examples of window dressing are:

• Withhold Payables. Postpone due suppliers and expenses, so that the period-end cash balance appears higher than it should be.
• Bad Accounts Receivable. Ignore bad debt expenses, so that the accounts receivable figure looks better and improve profitability by avoiding written off.
• New Look to Fixed Assets. Sell off those fixed assets with large amounts of accumulated depreciation associated with them, so the net book value of the remaining assets appears to indicate a relatively new cluster of assets.
• Pull Future Revenue. Offer customers an early shipment discount, thereby accelerating revenues from a future period into the current period.
• Change in Depreciation Policy. Switch from accelerated to straight-line depreciation in order to reduce the amount of depreciation charged to expense in the current period.
• Withhold Expenses. Withhold bills related to expenses, so that they are recorded in a later period.

The window dressing concept is also used by investment funds managers, who sell-off poor performing stocks and other poor investments near the end of a period and use the money received to buy high performing stocks. The new investors see the portfolio of high performing stocks and want to invest.

The entire concept of window dressing is clearly unethical, since it is misleading.

Agree with expert answer given by Mr.Shahbaz Hayder . Thank you

agree with the top answer.

Thanks for invitation

Window dressing  means showing a wrong picture.The fraud through manipulation of accounts is also known as window dressing because accounts are manipulated to show a wrong picture of the profit or loss of the business and its financial state of affairs. Normally this type of fraud is committed by the people at the top level. IT does not involve any misappropriation of cash  or goods but it is either over statement of profit or understatement of the same.

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full agree with details answer from Shahbaz Hayder 

Agree with Shahbaz Hayder----------------

Hi,

Window Dressing is the adjustment made or not made prior/after issuing the financial statements to have/show positive balances in the financial statements to share holders. 

This can be like postponing some payments, offering discounts for early payments to receive from customers. 

Thanks,