cookie jar reserves

cookie jar reserves
A semi-humorous term for *reserves or accrued expenses created with the intention of manipulating *financial statements. The term derives from the image of dipping at one’s convenience into a jar of cookies. By analogy, reserves of this type are released at the convenience of the managers of an organization to inflate *earnings at times of weak financial performance. Selective use of reserves in this manner is a subversion of the *accruals basis of accounting, and is forbidden by most systems of *Generally Accepted Accounting Principles. The term "cookie jar reserves" was used in a speech in 1998 by Arthur Levitt, then chair of the *Securities and Exchange Commission. See also *big bath reserves.

Auditor's dictionary. 2014.

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