What is off balance sheet treatment?
I read that the financial crisis was also due to a lot of companies keeping items off their balance sheet. Do you know what off balance sheet treatment means? Can you give an example?
On the other hand, there are examples where for example a company keeps assets off the balance sheet by leasing them. Before the Enron Scandal, the accounting standards were not that strict regarding the finance and the operating leases.
The new standards introduce the “substance over form” definition but the leases is not the only off balance sheet treatment. Other examples include joint ventures and other more complicated items especially in the banking and the financial services sector in general.