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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?
Kindly further explain why auditors need to check pre year end and post year end statements for the audit of receivable and payable balances , I find it hard to understand why this should be an appropriate audit procedure.
Thank you.What does “just dropped” mean? If the client has not paid in the cash by year end, it is not cash on the SOFP.
There isn’t a lot of point in checking statements sent to customers as these are generated internally. Checking statements from suppliers allows you to verify that the liability at year end is accurate etc. I don’t think it particularly verifies cut-off.
Thank you for your reply, By ‘drop off ‘ I mean for example a cheque in transit being cleared, which was apparently the cause of the difference between the debtors balance and the clients receivable balance.
Does it verifies accuracy or completeness instead?
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