Definition
Each lead schedule gathers several general ledger accounts under one heading, such as cash or accounts receivable. It typically shows the prior-year audited balance, the current-year unadjusted balance, proposed adjusting and reclassifying entries and the final balance, with references to the supporting working papers. It sits at the top of the section it leads.
Why it matters in an audit or review
Lead schedules connect the trial balance to the financial statements and to the underlying work. A reviewer starts here to see whether every account was addressed and whether adjustments flow through. Gaps appear fast: an account with no cross-reference has no support, and a balance that does not agree to the trial balance suggests a late entry.
Example
The cash lead has three accounts: operating $412,300, payroll $18,000 and petty cash $500 (illustrative). The total of $430,800 agrees to the trial balance and to the balance sheet line. Each account is cross-referenced to its bank reconciliation, confirmation and count sheet, and a proposed entry of $2,100 for an unrecorded deposit is shown in the adjustment column.
Common mistakes
- Updating the trial balance without updating the lead.
- Missing the cross-reference to supporting schedules.
- Failing to tie the lead to the financial statement line.
FAQ
Is a lead schedule required by the standards?
No. It is a common practice tool for organizing documentation that AU-C 230 does require.
Sources
- AICPA, AU-C Section 230, Audit Documentation
- No auditing standard prescribes a lead schedule format. It is a practice tool for meeting the AU-C 230 documentation requirements.
Definitions paraphrase AICPA and FASB guidance; read the standard itself before relying on a requirement. Example figures are illustrative. This page is guidance, not professional advice. Report an error