The statement is correct. Requesting a bank cut-off statement for a period of 10 to 15 days after the balance sheet date is a standard audit and fraud examination procedure. The purpose of this statement, which is sent directly from the bank to the examiner, is to verify the reconciling items listed on the year-end bank reconciliation. This timeframe is considered sufficient for most outstanding checks to clear and for deposits in transit to be posted by the bank. By tracing these items from the reconciliation to the cut-off statement, an examiner can detect schemes such as kiting, concealing liabilities by omitting outstanding checks, or overstating cash by including fictitious deposits in transit.

This is a "True or False" question. The alternative, "False," is incorrect because the 10-15 day period is a widely accepted and recommended best practice in both auditing and forensic accounting. A shorter period might not allow all outstanding items to clear, while a longer period would include too many transactions from the new period, making the verification process less efficient and potentially obscuring the items of interest.

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

Section 1: Financial Transactions and Fraud Schemes, Subsection: Cash, Part: Detection. The manual describes procedures for detecting cash misappropriation, including the analysis of bank statements. It details the use of a cut-off bank statement to verify reconciling items from the period-end bank reconciliation. The recommended period is typically 7 to 15 days after the closing date to ensure outstanding checks and other items have cleared. This procedure is fundamental for identifying unrecorded checks or manipulated deposits.

2. Arens, A. A., Elder, R. J., & Beasley, M. S. (2019). Auditing and Assurance Services (17th ed.). Pearson.

Chapter 23: Audit of the Cash and Financial Instruments. This standard university-level auditing textbook explicitly details the procedure for obtaining and using a bank cut-off statement. It states, "A cutoff bank statement is a partial-period bank statement and the related copies of or digital access to cancelled checks, duplicate deposit slips, and any other documents included in bank statements, mailed 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... A cutoff statement for 7 to 14 days is typical." The 10-15 day range in the question aligns perfectly with this standard academic guidance.

3. Albrecht, W. S., Albrecht, C. O., Albrecht, C. C., & Zimbelman, M. F. (2019). Fraud Examination (6th ed.). Cengage Learning.

Chapter 10: Financial Statement Fraud. In the section discussing detection of financial statement fraud, particularly related to cash and revenue overstatement, the text outlines key audit and investigation steps. It highlights the importance of obtaining bank cut-off statements directly from the financial institution to independently verify period-end cash balances and identify manipulations like holding the books open or kiting. The text supports using a post-balance-sheet period sufficient to see the clearance of year-end transactions, consistent with the 10-15 day timeframe.