A threefold approach is typically followed when determining the reasonableness of cutoff. Briefly describe the threefold approach.

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A threefold approach is typically followed when determining the reasonableness of cutoff. Briefly describe the threefold approach.

Answer:

First, auditors should decide on the appropriate cutoff criteria. Second, they must evaluate whether the client has established adequate procedures to ensure a reasonable cutoff. Finally, auditors must test whether a reasonable cutoff was obtained.

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