Cut-off mistakes that distort intercompany sales

When two Hong Kong entities book the same stock movement on different dates, the year-end intercompany difference looks like a mystery receivable. In practice it is often a cut-off problem.

Goods still on the barge

Trading groups that move goods between a Kwun Tong warehouse entity and a retail entity sometimes invoice on shipment while the counterpart waits for goods-received notes. If the vessel or truck crosses midnight on the reporting date, one ledger shows a sale and the other still shows inventory with a related party.

What to check before calling it a dispute

1. Compare invoice date, delivery note date, and warehouse log
2. Confirm whether Incoterms or internal policy assign ownership at despatch or arrival
3. Look for credit notes raised in the first week of the new year that reverse the timing difference

How we sample

In an intercompany transaction audit we select movements within ten days either side of year-end and match both entity packs. Findings note whether the difference is timing only or whether one side lacks any supporting note at all.

If your close is approaching and aged “timing” items keep rolling forward, a focused balance review before the statutory auditor arrives can shrink the surprise list.