Field note
Cut-Off Testing Around Month-End in Multi-Entity Groups
Month-end is where legitimate pressure and irregular posting can look alike. Sales teams push shipments; controllers push accruals. Cut-off testing asks a simple question: does the evidence belong in this period?
For multi-entity groups, align the testing calendar to each entity’s close, not to headquarters’ reporting date alone. Goods shipped from Taoyuan on the last day may clear customs after the books close in Taipei. Shipping documents, warehouse logs, and customer acceptance notes matter more than the invoice date printed by the billing system.
On the expense side, look for invoices received early in the new month that describe services completed before period end—and the reverse. Large manual journals posted in the final two days deserve a full voucher pack: who requested, who approved, and what independent evidence supports the amount.
When cut-off fails, expand the sample in the same account and the same posting window. Isolated errors happen; patterns around the same preparer or the same customer deserve a wider fraud-review lens.