Cut-off questions auditors ask about intercompany
Intercompany reconciliations look tidy until fieldwork begins. Auditors rarely argue with your pivot table; they ask why Entity A’s receivable does not equal Entity B’s payable after eliminating FX — and who decided shipping terms controlled revenue timing.
Reciprocal first, narrative second
Start with a mirrored extract. Differences should be classified as timing, FX, or error before anyone drafts a memo. Our Intercompany Cut-Off Lab forces that sequence so narratives do not hide math.
Confirmation gaps
When sister entities disagree, the gap itself is evidence. Document the last confirmation attempt, the unresolved amount, and whether management proposes an adjustment or an explicit unadjusted difference. Hiding the gap in “rounding” invites follow-ups.
Korea context
Groups filing under K-IFRS still need entity-level discipline. Shared-service centers often reconcile in KRW while subsidiaries book in functional currencies — call that out early so reviewers do not invent a control failure where a translation bridge already exists.
Financial auditing guidance for ledger reconciliation treats cut-off as a calendar problem and a documentation problem. Fix both, or neither sticks.