Cut-off testing
Cut-off is a comparison of the period a transaction was recorded in against the period the service or delivery actually fell in. That makes an error a fact rather than a judgement — and it makes the correcting entry, and its effect on reported profit, derivable rather than debatable.
What the sample says about the population
A sample result is a fact about the sample. What a reviewer needs is what it implies about the accounts — and whether the sample is large enough for that to mean anything.
| Stream | Tested | Population | Coverage | Error rate | Projected misstatement |
|---|---|---|---|---|---|
| Revenue All revenue transactions with a document or delivery date within 5 working days of period end | 4(1 wrong) | 412 14,100,000 | 7% by value | 13.3% | 1,875,117 |
| Purchases All purchase transactions with a goods-receipt or invoice date within 5 working days of period end | 5(1 wrong) | 386 8,117,500 | 5% by value | 10.58% | 858,653 |
| Payroll All payroll runs and accruals spanning the period end | 1 | 24 2,544,500 | 9% by value | 0% | — |
10 items were tested against a population of 822. The projection is arithmetic — the error rate found, applied to what was not looked at — and the platform computes it because withholding it would be worse. But a sample this size cannot support a conclusion about the accounts, and the honest response to a projection above materiality is to extend the testing rather than to book it.
CO-03 · INV-ID-2026-002
Revenue · E300 · document 2026-01-02, delivered 2025-12-29
Marine services rendered at Tanjung Priok before period end of SGD 128,000 was recorded in FY2026 but the revenue fell in FY2025. Correcting it increases profit for the current period by SGD 128,000.
Raise the accrual so the revenue falls in FY2025, and confirm the customer has been invoiced in the following period.
| Dr 1100 Trade receivables | 128,000 |
| Cr 4100 Revenue | 128,000 |
| Effect on profit | +128,000 |
CO-06 · PINV-MY-5510
Purchases · E200 · document 2025-12-31, delivered 2026-01-04
Spare parts received after period end of SGD 46,500 was recorded in FY2025 but the purchases fell in FY2026. Correcting it increases profit for the current period by SGD 46,500.
Reverse the charge into FY2026 and confirm the goods receipt date against the supplier documentation.
| Dr 2000 Trade payables | 46,500 |
| Cr 5000 Purchases | 46,500 |
| Effect on profit | +46,500 |
Every transaction tested
Recorded period against the period the service or delivery fell in
| Test | Stream | Document / delivery | Recorded → belongs | Amount | Profit effect | Result |
|---|---|---|---|---|---|---|
CO-01 Charter hire for the December voyageINV-2025-4471 · E100 | Revenue | 2025-12-28 / 2025-12-22 | FY2025 → FY2025 | 412,000 | — | Correct |
CO-02 Marine services rendered at Port KlangINV-MY-2025-880 · E200 | Revenue | 2025-12-30 / 2025-12-27 | FY2025 → FY2025 | 168,500 | — | Correct |
CO-03 Marine services rendered at Tanjung Priok before period endINV-ID-2026-002 · E300 | Revenue | 2026-01-02 / 2025-12-29 | FY2026 → FY2025 | 128,000 | +128,000 | Error |
CO-04 Charter hire commencing in the new periodINV-2026-0006 · E100 | Revenue | 2026-01-03 / 2026-01-03 | FY2026 → FY2026 | 254,000 | — | Correct |
CO-05 Bunker fuel delivered before period endPINV-88213 · E100 | Purchases | 2025-12-29 / 2025-12-24 | FY2025 → FY2025 | 196,400 | — | Correct |
CO-06 Spare parts received after period endPINV-MY-5510 · E200 | Purchases | 2025-12-31 / 2026-01-04 | FY2025 → FY2026 | 46,500 | +46,500 | Error |
CO-07 Consumables received in the new periodPINV-ID-2026-011 · E300 | Purchases | 2026-01-05 / 2026-01-05 | FY2026 → FY2026 | 38,200 | — | Correct |
CO-08 Port dues for December invoiced in arrears and accruedPINV-88377 · E100 | Purchases | 2026-01-06 / 2025-12-31 | FY2025 → FY2025 | 96,500 | — | Correct |
CO-09 December crew wages paid in January and accruedPAY-2025-12 · All | Payroll | 2026-01-05 / 2025-12-31 | FY2025 → FY2025 | 240,000 | — | Correct |
CO-10 Insurance premium for the 2026 policy yearPINV-INS-2026-01 · Group | Purchases | 2026-01-15 / 2026-01-01 | FY2026 → FY2026 | 62,000 | — | Correct |