Cut-off testing when freight arrives late

Late inbound freight is one of the most common sources of year-end misstatement for coastal wholesalers. Goods may leave the supplier in late March and clear the warehouse in early April, while the invoice sits in accounts payable for the old year — or the new one.

What we look for

Auditors compare receiving reports around the closing date with purchase invoices and inventory movement logs. A receipt dated 2 April for goods that were on the water on 31 March usually belongs in the old year’s inventory and payables if title had already passed.

Documents that help

Keep a simple goods-in-transit schedule: bill of lading date, expected arrival, invoice date, and whether the item appears on the year-end inventory listing. Warehouse supervisors who can explain weekend receiving save hours of voucher chasing.

A mild caution

Companies sometimes “clean” cut-off by holding invoices. That creates the opposite error. Bring disputed freight accruals to the planning meeting rather than hoping they go unnoticed.