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Fred, an assistant auditor, was assigned to the year-end audit of a small manufacturer of language translation equipment. Fred's first assignment was to test the cutoff of year-end sales transactions. The manufacturer uses a calendar year-end for financial statements. Fred obtained computer generated sales ledgers and journals for December and January. Fred then traced ledger postings for a few days before and after December 31 to the sales journals noting the dates of the journal entries. Fred determined that no journal entries were posted to the ledger in the wrong period. Therefore, Fred concluded that the client cutoff of sales transactions was effective.

Was Fred's conclusion valid? Why or why not?

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