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Window Dressing

In:

Submitted By lhvepg
Words 3415
Pages 14
Introduction
The user of information and they needs of information are varied and as consequences the ways to present the financial statements also can be. Depending on the corporation, this information can be presented in a way that reflected an image according to the user’s needs, in other words, present the information that users want to see. In this sense, is important to know that this information is not always the most real neither the better.

By definition Window Dressing is:
“Window dressing is a set of actions or manipulations with financial or other information in financial documents (financial statements, reports, etc.) to make this information look more attractive to its users. Even though window dressing can occur at any time, it is commonly used at the end of a period.”

The Window Dressing effect is a “fashion phenomenon” because its use has appeared in recent years in the media as really famous financial scandals around the world, like Enron, Worldcom, Parmalat and others.

When Window Dressing is used in good terms and presented according to legal norms it could be a useful tool for the corporations, otherwise, the malicious use could end in frauds and illegal issues with serious consequences for the people involved.

Window Dressing
The Window Dressing effect can be divided into two types of accounting:
 Creative Accounting
Is a legal system that use the deficiencies in the accounting system to satisfy the needs in the short term and to achieve diverse objectives by the transitory use.
 Fraud Accounting
Sanctioned by the law, are the adjust of transactions and other techniques that don’t follow the norms and legal rules with the purpose of present the information to third people mainly with fiscal intentions.

Reasons to use Creative Accounting
Nowadays and as consequence of the financial crisis of 2008 that has affected to the

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