Cutoff, existence?

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    Topic
  • #161005
    OneStepAwayCPA
    Participant

    Cutoff tests designed to detect credit sales made before yr end that have been recorded in subsequent yr provide assurance about mgmt assertion of :

    A. Presentation

    B. Completeness

    C. Rights

    D. Existence

    Now I know it’s completeness because sales tend to be overstated and we need to trace/completeness. My queston is, if it asks “detect liabilities made before yr end”, would the answer be d? The ans explanation confuses me. From Wiley: “existence assertion would be tested if the auditor sampled from sales recorded prior to yr end to determine whether the sale occurred before or after yr end.”

Viewing 6 replies - 1 through 6 (of 6 total)
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  • #290986
    killaking
    Participant

    Existence pertains mainly to overstatements

    Cutoffs=Completeness = understatements

    people mainly hide liabilities

    FAR: 7/17/10 missed exam FML reschedule 8/29/10-77 EPIC!
    REG: 5/31/11-73 SMH, 8/31/11-85
    BEC: 4/15/10-72 : retake 10/3/10-80
    AUD: 11/28/10-74, 02/27/11-71 FML, 8/1/11-80
    Ethics 10/22/22-80, retake 11/28/11 - 88

    #290987
    Soproudofmyself
    Participant

    so if the question was asking about liabilities instead of sales, the answer would still be completeness correct?

    #290988
    killaking
    Participant

    Yea

    FAR: 7/17/10 missed exam FML reschedule 8/29/10-77 EPIC!
    REG: 5/31/11-73 SMH, 8/31/11-85
    BEC: 4/15/10-72 : retake 10/3/10-80
    AUD: 11/28/10-74, 02/27/11-71 FML, 8/1/11-80
    Ethics 10/22/22-80, retake 11/28/11 - 88

    #290989
    killaking
    Participant

    one more thing watch out if the question say they look at AP from the records to the source documents that is existence.

    the opposite is completeness.

    FAR: 7/17/10 missed exam FML reschedule 8/29/10-77 EPIC!
    REG: 5/31/11-73 SMH, 8/31/11-85
    BEC: 4/15/10-72 : retake 10/3/10-80
    AUD: 11/28/10-74, 02/27/11-71 FML, 8/1/11-80
    Ethics 10/22/22-80, retake 11/28/11 - 88

    #290990
    Erica H
    Participant

    Existence is “Does it exist?” or “Did it occur?”

    Completeness would be “Is everything that happened actually recorded?”

    They are kind of the opposite. You could think or existence as “This is recorded, did it happen?” and completeness as, “this happened, did it get recorded?”

    Presentation would be, “this happened, did it get recorded CORRECTLY?”

    And R&O would be, “this is happened, and was recorded, but is it OURS? are we liable for it?”

    AUD - 92
    FAR - 73, 82
    REG - 72, 82
    BEC - 84 DONE!!!!!! 🙂

    #290991
    OneStepAwayCPA
    Participant

    So cutoff is always related to completeness? Whether cutoff of sales or cutoff of liabilities?

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