During the testing of a year end bank reconciliation, an auditor noticed that the majority of checks listed as outstanding at year-end had not cleared the bank. Which of the following is a likely explanation?
A) A high probability of kiting.
B) A high probability of lapping.
C) The year-end cash disbursements records had been closed prior to year-end.
D) The year-end cash disbursements records had been held open past year-end.

Question

Quizplus · Accepted Answer

If the year-end cash disbursements records had been held open past year-end, it is likely that some checks outstanding at year-end would still be outstanding after year-end. This could explain why the majority of checks listed as outstanding had not cleared the bank.

During the Testing of a Year End Bank Reconciliation, an Auditor