In short
A bank cutoff statement covers a short period after year-end, often 10 to 20 days, and is sent by the bank directly to the auditor. It lets the auditor check the items on the client's year-end bank reconciliation.
Key takeaways
- Outstanding checks should clear, and deposits in transit should appear, within the period.
- Checks clearing that weren't listed as outstanding may indicate kiting or unrecorded disbursements.
- Receiving it directly from the bank makes it more reliable than the client's copy.
Where it's tested
AUD: Responding to Assessed Risks — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
An auditor assesses control risk as very low for the revenue cycle after successfully testing controls. Which statement is correct regarding substantive procedures for revenue?