trainwreck financials, page-12

Common way to manipulate profits is in the forecast. Profits are often recognised on a percentage completion method. ie 80% complete, then can book 80% of forecast profits. Problem comes where the contract manager (or higher up the food chain) decides they need more or less profit and then manipulates the forecast costs to complete. A not all too uncommon scenario is a contract tracking perfectly according to budget & then going to custard in the late stages of completion when a 'true' forecast is done because it can't be avoided. The bigger the contract, the more custard. This can have particularly nasty consequences when crossing financial years.

Have too say I haven't seen much if any booking of costs from one contract to another on large contracts.

Tendering process is often questionable too where a descision to 'buy' work or market share is taken by someone higher up the food chain. This often leaves the contract manager in a tight spot not wanting to disappoint...until its too late.