It is unethical and possibly illegal to use technical adjustments in the company's financial statements to artificially beautify the profit situation. This kind of behavior will not only mislead investors, creditors and other stakeholders, but may also have a serious negative impact on the company, shareholders and the entire market. The following are some technical adjustments that may be abused and the risks they may pose： ### 1. **Advance or delay in revenue recognition** -**Early recognition of income**: When the income has not been actually realized or the income recognition conditions have not been met, the income will be included in the financial statements in advance. This may lead to a short-term increase in profitability, but in the long run it will damage the company's reputation and financial health. -**Delayed confirmation of expenses**: The expenses that should have been included in the current period are postponed to a future period, thereby artificially increasing the current profit. ### 2. **Treatment of asset impairment provisions** -**Reduce asset impairment provisions**: Artificially increase asset value and profits by underestimating or reducing asset impairment provisions. This approach will mask the actual value of the assets, resulting in greater financial risks in the future. -**Over-provision for impairment**: Over-provision for impairment in the current period, so as to “create” profits by flushing back the impairment provision in the future period. ### 3. **The choice of capitalization and costization** -**Capitalization of expenses**: Capitalize expenses that should have been processed as expenses into assets, thereby reducing current expenses and increasing current profits. This approach will lead to an increase in depreciation or amortization expenses in future periods, affecting future profitability. ### 4. **Related-party transactions and transfer pricing** -**Transfer of profits through related-party transactions**: Use transactions between affiliated companies to artificially adjust income and expenses in order to achieve the purpose of beautifying profits. This approach may violate the principle of fair trading and may attract the attention of regulatory agencies. ### 5. **Treatment of reserves and contingent liabilities** -**Reduce reserves**: Artificially increase current profits by reducing or underestimating reserves (such as bad debt reserves, legal litigation reserves, etc.). This approach may lead to greater financial pressure in the future period. -**Ignore contingent liabilities**: Do not disclose contingent liabilities or underestimate their impact, thereby masking potential financial risks. ### 6. **Changes in accounting policies** -**Abuse of accounting policy changes**: Artificially adjust the figures in the financial statements by changing accounting policies or accounting estimates (such as depreciation methods, revenue recognition time points, etc.). This practice may violate accounting standards and may lead to the incomparability of financial statements. ### 7. **Handling of non-recurring items** -**Classify recurring expenses as non-recurring items**: Classify expenses that should have been treated as recurring expenses as non-recurring items, thereby reducing the impact on current earnings. This approach will mislead investors' judgment on the profitability of the company's core business. ### Risks and consequences -**Legal and regulatory risks**: Artificially beautifying financial statements may violate accounting standards and laws and regulations, resulting in the company facing legal actions, fines and even criminal liability. -**Reputation risk**: Once discovered, the company's reputation will be seriously damaged, which may lead to a plunge in stock prices and difficulties in financing. -**Financial health risks**: Artificially beautifying the financial statements will mask the company's true financial situation, which may cause the company's management to make wrong business decisions and ultimately affect the company's long-term development. ### Suggestion As a financial professional, we should uphold the principles of integrity and transparency, strictly abide by accounting standards and laws and regulations, and ensure that the financial statements truthfully and fairly reflect the company's financial situation and operating results. If it is found that there is an act of artificially beautifying the financial statements within the company, it should be reported to the management or regulatory agencies in a timely manner to maintain the healthy development of the company and the market. Through legal and compliant financial management, the company can establish a good reputation and win the trust of investors and the market, so as to achieve sustainable long-term development.