Assignment 2 Case: Window Dressing

The essential focus of the 2nd case is how an audit firm window dresses terms and audit engagement contracts. Talking to clients before audits are due is a tolerable way of doing business. Most organizations offer rebates, discounts or other perks to accept audit engagements early. In most situations if the early engagement is within a year of the audit or the present year there is issue. An organization cannot accept an engagement too far in the future as they will not know if they will be around, or prices could change as well. If shipping all orders received through December 31 is considered window dressing then every organization is guilty of this. It is impossible to differentiate this situation from competent operations. If the
A sell is recognized when the merchandize is transferred from the vendor to the customer. This is usually done by F.O.B shipment or F.O.B destination; the merchandize should be shipped by the seller but direct shipments do happen. This is considered a cut off error and it should not be recognized as revenue for the present year. Recording of checked dated December 31 as a cash acceptance is a new cut off error. The date needs to be used to record the actual cash acceptance date. The acceptance date is the date in which the check was received, not when the check was wrote. This is not a type of window dressing that is allowed and it draws red flags on cash inflow. Having an officer repay the loan from the company, and then renewing it is considered as a related party transaction. This would be a type of window dressing that is allowed as it has to be recorded on the financial statements released to stakeholders. The repayment of the treasurer and renewing of the loan would have to be documented in the account the day the transaction happened. This would only temporarily benefit the financial statements and would have little to no impact on the financial