An Auditee Uses a Cut-Off Date Other Than the Balance

question 58

Multiple Choice

An auditee uses a cut-off date other than the balance sheet date to ensure PPE purchases have been recorded in the proper period.What impact will this have on the audit?

• A)No reliance on internal controls for PPE is possible in this audit and a substantial approach must be taken.
• B)No additional audit testing is required beyond the cut-off date.
• C)The audit opinion must be modified due to a material GAAP departure in the financial statements.
• D)The auditor should verify both the cut-off and the transactions in the roll-forward period.

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Definitions:

Desired Rate of Return

The minimum return an investor expects to achieve by investing in a particular asset, taking into account the asset's risk level.

Share

A unit of ownership in a company that entitles the holder to a proportion of the corporation's assets and profits.

Dividend Growth

Dividend growth is the rate at which a company's dividend payments to shareholders increase over time, indicative of the company's financial health and profit distribution policy.

Rate of Return

A measure of the profitability of an investment expressed as a percentage of the original investment.