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

Question

Quizplus · Accepted Answer

The auditor requests a cutoff bank statement to verify reconciling items on the client's bank reconciliation. This statement helps the auditor in determining if any outstanding checks or deposits in transit have been recorded properly in the correct accounting period. By doing so, the auditor can ensure that the balances in the financial statement match with the balances in the bank statement. Thus, option B is the correct answer. Option A is incorrect because the auditor verifies the cash balance reported by the bank independently of the cutoff statement. Option C and D are also incorrect because these procedures are used to detect fraud related to cash disbursement and receipts, respectively.

An Auditor Who Is Engaged to Examine the Financial Statements