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Adjusting Timing of Sales

You are new accountant at the company and your boss orders you to backdate several sales invoices so that the sales are recognized in the previous fiscal year and not the current year. Assuming that the sales are legitimate, what is the harm of "adjusting" the timing of the sales? What would you do if the boss orders you to make the changes?

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The harm of adjusting the sales has to do with GAAP, adherence to regulations, and disclosure. If you adjust the sales, the financial statements that will be produced will not be GAAP compliant. All sales must be recorded in the proper accounting period. In addition, if and when the financial statements are ever audited, they would never pass an audit, as the auditing assertions will not be met. Public companies are required to have external audits, but ...

Solution Summary

This solution discusses backdating sales invoices. A thorough discussion regarding this practice and its effects is provided.