An auditor who is engaged to examine the financial statements of a business enterprise will request a cutoff bank statement primarily to:

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The auditor will request a cutoff bank statement primarily to verify reconciling items on the entity's bank reconciliation. A cutoff bank statement is a statement that covers a period of time up to the date of the year-end. It helps the auditor identify any reconciling items that may need adjustment or correction, such as outstanding checks or deposits in transit, that are recorded on the entity's bank reconciliation but may not be reflected in the year-end bank statement. This is important because reconciling items can affect the accuracy of the cash balance reported in the financial statements. Detecting lapping and kiting are other ways of identifying potential irregularities in the bank reconciliation process, but they are not the primary reason for requesting a cutoff bank statement.

An Auditor Who Is Engaged to Examine the Financial Statements