Question

To test the client's list of outstanding checks on the bank reconciliation for completeness, the auditor should trace from the list to the checks included with the cutoff bank statement.

A) True
B) False

Answer 1

The statement is true; the auditor should trace from the list of outstanding checks to the checks present in the cutoff bank statement to confirm completeness in the bank reconciliation process.

Step-by-step explanation:

The statement that to test the client's list of outstanding checks on the bank reconciliation for completeness, the auditor should trace from the list to the checks included with the cutoff bank statement is True. Performing this procedure allows the auditor to verify that the checks listed as outstanding were indeed not cleared before the cutoff date, confirming that they have been correctly included as outstanding in the bank reconciliation. It is an essential part of the audit procedure to ensure the completeness and accuracy of the outstanding checks in the reconciliation process.