A material misstatement means an error or fraud that is serious enough to affect the financial statements.
Possible misstatements in cash include:
2. Window Dressing
Window dressing happens when management tries to make the company look financially stronger than it actually is.
Example:
A director repays a loan to the company just before year-end, so the cash balance looks higher. Then, after year-end, the director borrows the money again.
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