In: Accounting
The audit program for the revenue account for a client has been drafted. The following item appears:
Item |
Assertion |
Detailed Audit Procedure |
2 |
Cut-off |
Select a sample of sales invoices recorded a few days prior to the year end and then agree dates on the invoices to the dates on the delivery documents signed by the customer. |
Required
a. Does the procedure address the stated assertion? Explain.
b. If your answer to part a is no, provide the correct assertion or explain what work would be required to address the assertion.
c. Explain what type of evidence is obtained by performing the stated procedure. How persuasive is it?
a) No, As sample of sales invoices recorded a few days prior to the year end and then agree dates on the invoices to the dates on the delivery documents signed by the customer. is not related to cut - off assertion
Cut-off transactions are related to year end period. and in this sample of invoices are of few days prior to year end.
b) The work that would be required to to address Cut- off assertion is: To select sample of sales invoices recorded
near to the year end and then agree dates on the invoices to the dates on the delivery documents signed by the customer, toseprate transactions of one period from another period, and they are recorded properly in correct accounting period.
c) Evidence to perform above assertion would be:
Inspecting the invoice document, and check to which period it belongs.
Obtain Written representation from management regarding correct recording of transactions near accounting year end to the period to which it belongs.