The risk of the company issuing checks near year-end and mailing them subsequently is not important to the auditor because the action does not affect cash balances.

Question

Quizplus · Accepted Answer

The risk of issuing checks near year-end and mailing them subsequently is important to the auditor as it may affect the cutoff procedures and the completeness of cash balances. If the checks are not properly recorded, it may lead to an incorrect representation of the cash and bank balances in the financial statements, which can result in misstatement or fraud. Therefore, the auditor should consider this risk and perform appropriate audit procedures to ensure the accuracy and completeness of the financial statements.

The Risk of the Company Issuing Checks near Year-End and Mailing