Definition of cookie jar accounting

accounting practice that inflates provisions for expected expenses and later reverses them toboost earnings-in many cases at very convenient times. This is traditionally abused when companies want to push reserves into future earnings. Reserves are set reserves to cover the estimated costs of taxes, litigation, bad debts, job cuts, and acquisitions. Company managers estimate reserves and the outside auditor judges whether the reserves are reasonable.Auditors rarely challenge company estimates because there are unclear guidelines for calculating reserves.