An auditor is auditing the 'Completeness' of the cash balance. Which procedure is most appropriate?

Answer options:

Counting cash on hand.

Reviewing the bank cutoff statement for outstanding checks that cleared after year-end.

Vouching deposits in transit to the bank statement.

Inquiring of the treasurer.

How to approach this question

Completeness = Is everything there? Cutoff statement helps verify the reconciliation items (what was missing from the bank view).

Full Answer

B.Reviewing the bank cutoff statement for outstanding checks that cleared after year-end.✓ Correct

The bank cutoff statement allows the auditor to verify the propriety of reconciling items (like outstanding checks and deposits in transit) on the year-end bank reconciliation, ensuring the adjusted book balance is complete and accurate.

Common mistakes

Confusing Existence (Bank Confirmation) with the detailed testing of the reconciliation (Cutoff Statement).

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