Cooking the books is an unethical practice of misrepresenting company’s financial standing. When cooking the books, corporations typically manipulate their accounting records and financial statements. Cooking the books is fraudulent and illegal, and is mainly done for the purpose of inflating profits, achieving preset budgets, and receiving sizeable bonuses. Methods employed for cooking the books are often sophisticated, requiring a deep understanding of financial accounting. Thus, ordinary investors are the ones that suffer the most severe damage from cooking the books. Cooking the books is exemplified by highly publicized bankruptcy cases involving companies like Wolrdcom, Enron, and Adelphia. However, despite their complexity, there are warning signs that may mark cooking the books. Delaying expenses, accelerating revenues, manipulating acquisition expenses, off-statement liability housing and other similar deceptive practices may all signal cooking the books activity. |
