Legal Status of Window Dressing

[Suba]

Window dressing is an activity undertaken by companies or investment managers to make financial statements or portfolios appear better, usually near the end of the year or at the close of the financial year.

Window dressing is often done to enhance a company's image, improve financial ratios, even if only temporarily, attract investors, and so on. Not all window dressing activities are considered illegal or unlawful; they are often considered unethical. However, if window dressing involves data falsification or fraud, it certainly violates criminal law.

One example of legal window dressing I frequently encounter is selling fixed assets near the end of the year, with the aim of improving solvency and liquidity ratios, but then repurchasing the fixed assets after the financial reporting period is over.

 

[Augusta]

I believe It is illegal for businesses to alter their accounting practices to change how their reports look.

 

[Starmix]

It's a case to case scenario and it also depends on the intention of the management if do window dressing. It's like window shopping checking the quality of the products and the prices behind them. If at the end of the year, the management sighted a good clue, he may opt to do a window dressing.

 

[aninditasen]

Window dressing is an activity undertaken by companies or investment managers to make financial statements or portfolios appear better, usually near the end of the year or at the close of the financial year.

Window dressing is often done to enhance a company's image, improve financial ratios, even if only temporarily, attract investors, and so on. Not all window dressing activities are considered illegal or unlawful; they are often considered unethical. However, if window dressing involves data falsification or fraud, it certainly violates criminal law.

One example of legal window dressing I frequently encounter is selling fixed assets near the end of the year, with the aim of improving solvency and liquidity ratios, but then repurchasing the fixed assets after the financial reporting period is over.

This is India is called misappropriation of official assets. If the official is caught he maybe jailed.

 

[Springtime]

Yes, window dressing is quite commonly adopted by businesses. It may not be illegal. Businesses usually highlight the positive ratios and opportunities facing the company to attract investors.