This is performed when the auditor believes the year-end bank reconciliation may be intentionally misstated.
The auditor checks whether transactions before and after year-end are correctly included or excluded.
Purpose : The auditor wants to ensure that:
- Cash receipts before year-end are properly recorded before year-end.
- Cash payments before year-end are properly recorded before year-end.
- Transactions after year-end are not wrongly included in the current year.
There is no manipulation such as:
- window dressing,
- kiting,
- delaying payments,
- recording receipts in the wrong period,
- misstating outstanding cheques or deposits in transit.
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