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question on cut off. If the auditor finds out that after his receivable circularisation, the balances of the client and their debtor is not in sync, he checks the post year end bank statement and finds out that the money had just dropped, is he going to adjust the financial statement for this? The pre year end and post year end checkings on assersions confuses me.
@ayotunde1 A question for you: What do you mean by the money had just dropped?
Adjustments are dependent of the concept of materiality, so you need to always bear that in mind when thinking about whether to adjust or not.
I don’t understand the question, why the money in post year end bank statement dropped? It should be increased, right?
The debtors paid to the client at the year end then the debtors recorded this transaction. However, due to the delay in bank transfer, the client would not received the money until post year end. Therefore, it will make sense if the question said: “he checks the post year end bank statement and finds out that the money had just increased”.
And in this situation, the auditor have to raise the adjusting entry for the differences (if material) due to the requiring of IFRS/ IAS no. … (I forgot the no.)
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