Explain the validity of F the auditor’s conclusion.

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Chapter 6, Problem 34QRA

To determine

Explain the validity of F the auditor’s conclusion.

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Richard Foster, an assistant auditor, was assigned to the year-end audit work of Sipher Corporation. Sipher is a small manufacturer of language translation equipment. As his first assignment, Foster was instructed to test the cutoff of year-end sales transactions. Because Sipher uses a calendar year-end for its financial statements, Foster began by obtaining the computer-generated sales ledgers and journals for December and January. He then traced ledger postings for a few days before and after December 31 to the sales journals, noting the dates of the journal entries. Foster noted no journal entries that were posted to the ledger in the wrong accounting period. Thus, he concluded that the client’s cutoff of sales transactions was effective. Please explain the validity of Foster’s conclusion.

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