Field Notes · 8 January 2026
Year-end cut-off for sales and purchases in trading companies
Cut-off testing remains one of the most common sources of audit adjustments for Japanese trading firms — here is how to tighten shipping and receiving evidence.
Trading companies live on timing. A shipment recorded a day early or a purchase booked a day late can move profit between periods. Auditors therefore examine shipping documents, receiving logs, and invoice dates around the year-end boundary.
Sales cut-off
Match bill of lading or delivery confirmation dates to invoice dates. If title passes on delivery to the customer’s warehouse, a truck still on the road at midnight on closing day usually belongs to the next period. Keep a folder of late December and early January shipments ready — we will ask for it.
Purchase cut-off
Goods received before year-end without an invoice still need accrual. A simple goods-received-not-invoiced listing, reconciled to the receiving log, prevents understated liabilities. Drop-ship arrangements deserve a separate note so ownership is clear.
A small habit that helps
Stamp or digitally mark documents with the recognition date your policy requires. When evidence of timing is ambiguous, auditors default to skepticism. Clear stamps shorten the conversation.