The following is a copy of the auditor’s working paper relating to the search for accounts payable cut-off testing for the client New Millennium Ecoproducts. 

Required 

(a) Why does an auditor test accounts payable cut-off? Explain with reference to income statement effects. 

(b) Explain the error found by the auditor in the second transaction on the working paper. 

(c) Why has the auditor done additional testing

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New Millennium Ecoproducts CLIENT: 12/31/2016 $ 000 Period end: EY Currency/unit: N03-ACCOUNTS PAYABLE CUT-OFF Buligng a better woning worie Reference NO3 Recorded in Delivery date/ the proper Date in AP Date of service period? Supplier name Invoice number Transactions recorded before year end Amount TM/Ref ledger provided TM/Ref Yes/No Comments E123456 EXP Ltd 12/29/2016 (10,000) SL 12/29/2016 Yes etc. Transactions recorded after year end 06/01/2017 (16,000) SL 12/29/2016 See below GROM Ltd G987654 No etc. Key to audit tickmarks: v Agrees to delivery note / date of service as mentioned on the invoice SL Agrees to subledger Comments: • This transaction (service) was recorded in the wrong period and not included in the accrued expenses as of Year 2016. We expanded our test by completing the following: Tests of details of transactions recorded from 01/01/2017 to 10/01/2017. This error seems to be isolated as no additional errors were detected. The error is posted to our summary of audit differences.