Bank cut-off statements should be requested for 10-15 days after the closing date of the balance sheet.

The statement is correct. A bank cut-off statement is a statement of bank activity for a short period after the date of the financial statements (i.e., the cut-off date). The standard recommended period for this statement is typically 10 to 15 days. The purpose of obtaining this statement is to allow the fraud examiner or auditor to verify the reconciling items on the year-end bank reconciliation. Specifically, it helps confirm that outstanding checks listed on the reconciliation were legitimate and cleared the bank in the subsequent period, and that deposits in transit were actually received and credited by the bank shortly after the period's end. This timeframe is considered optimal because it is long enough for most outstanding items to clear but short enough to avoid being cluttered by numerous transactions from the new accounting period.

The alternative, "False," is incorrect. The 10-15 day timeframe is a well-established best practice in both fraud examination and financial auditing for performing a cut-off analysis of cash transactions. A significantly shorter period might not capture all the relevant clearing transactions, while a longer period would introduce an excessive number of new, irrelevant transactions, complicating the verification process and defeating the purpose of a focused "cut-off" test.

1. Association of Certified Fraud Examiners (ACFE). (2023). Fraud Examiners Manual.

Section 4.413

Detecting Concealed Liabilities and Expenses: The manual describes the use of a cutoff bank statement as a key procedure. It states

"A cutoff bank statement is a client bank statement that includes all paid checks and deposits made for a period of seven to ten business days after the cutoff date." A period of seven to ten business days is functionally equivalent to 10-15 calendar days

which aligns directly with the timeframe mentioned in the question.

2. Arens

A. A.

Elder

R. J.

& Beasley

M. S. (2020). Auditing and Assurance Services (17th ed.). Pearson.

Chapter 23

Audit of Cash and Financial Instruments

p. 751: In the section discussing tests of the bank reconciliation

the text explains the purpose of a bank cutoff statement. It states

"Auditors verify the appropriateness of the client’s bank reconciliation by testing it... A cutoff bank statement is a partial-period bank statement... sent by the bank directly to the CPA firm’s office. The purpose of the cutoff bank statement is to verify the reconciling items on the client’s year-end bank reconciliation with evidence that is not accessible to the client." The typical period requested is described as 7 to 14 days. This university-level textbook confirms the standard practice.

3. Singleton

T. W.

& Singleton

A. J. (2010). Fraud Auditing and Forensic Accounting (4th ed.). John Wiley & Sons.

Chapter 8

Cash and Checks: Skimming

Larceny

and Check Tampering

p. 174: In discussing proactive audit tests for cash

the text recommends obtaining a bank cutoff statement. It notes

"Obtain a bank cutoff statement of the first 10 to 15 days of the next period directly from the bank to check for canceled checks." This source

widely used in forensic accounting university courses

explicitly specifies the 10-15 day period.