Obtaining a schedule of bank transfers between the auditee's accounts a few days before and after the year-end date and testing the propriety of items included,is a procedure done primarily to detect what type of misstatement?

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Testing bank transfers between the auditee's accounts a few days before and after the year-end date is primarily done to detect overstatement of cash balances due to cheque kiting. Cheque kiting involves intentionally creating a false impression of cash balances through the interchange of cheques between bank accounts. This procedure allows the auditor to determine if there is a genuine transfer of funds that supports cash balances reported in the financial statements.

Obtaining a Schedule of Bank Transfers Between the Auditee's Accounts