Reference no: EM133001745

Problem 1: Identify the technique of financial shenanigan used in the following situations and define the technique.

a) Muskan & Pranshul Limited presented their financial statement for the year 2019-20. As per the report of auditor the financial statement of the company does not present true and fair picture of financial performance as well the financial position of the company. Auditors have qualified their report by saying that the company had overstated its expenses and created reserves like strategic reserve, reserve for bonus and profit sharing etc.

b) Janvi Limited, a telecom service provider, in its effort to enhance the customer base strategically increased the target of marketing team and asked them to double their target for the current year. Marketing department, in turn, put pressure on distributors and asked them to stock the supplies made by the company with a promise of extension of credit period. Apart from this, in order to increase the EAT of the company Janvi limited requested DK Limited to buy their products in this financial year on credit at the condition that Janvi limited will buy back these products from DK limited at the same terms & conditions in the next financial year.