For a calendar year audit, say the audit is being done as of December 31, 2007. The auditor will get the bank statement as of December 31, 2007 around January 10th (cutoff statement) instead of waiting around the end of January, 2008. Bank statements usually arrive around the end of the month you are in for the previous month.

The tests performed using a cutoff statment include verifying that outstanding checks have been comlpetely and accurately recorded as of year-end, and that deposits in transit have cleared within a reasonable period.

The primary purpose is to help auditors verify reconciling items with the bank reconciliations.   

Hanni,

I have one major correction on the first paragraph of my response. Scratch the first para. of my first response.

I meant to say that the cutoff statement should be done for January 2008, say receive the cutoff statement for the month of January as of January 15th, 2008 to see if the o/s checks have cleared or the deposit in transit have been recorded as of December 31, 2007 in January, 2008.

The second & third paras. seem ok to follow.

Hope I did not confuse you more. 

Hello,

What is the difference between bank reconciliation and cutoff bank statement?  My understanding is that auditors use cutoff bank statement to ensure the transactions were recorded in the proper accounting period.    Do auditors use cutoff bank statement and bank reconciliation for the same purpose?

What is the difference between bank transfer schedule and cutoff bank statement?  I know auditor uses bank transfer schedule for detecting kiting by comparing the dates checks are drawn to the dates checks are deposited.  Becker also memtions that cutoff bank statement used for testing of kiting.  Isn't bank transfer schdule more appropriate than cutoff bank statement?

Thanks!!

Up up~~

I have same questions here. see if anyone can help us..thanks!!!