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Glossary/Audit procedures

Subsidiary ledger

A subsidiary ledger holds the detailed records behind one general ledger control account, such as customer balances for receivables, and its total must agree to the control account at each period end.

CORAA TeamUpdated November 5, 2026

Definition

A subsidiary ledger, or subledger, records transaction-level detail for a class of items. Common examples are accounts receivable by customer, accounts payable by vendor, inventory by item and fixed assets by asset. The general ledger carries a single control account that summarizes the subledger. Posting to the subledger updates the control account, and the two should agree after the close.

Why it matters in an audit or review

The auditor begins by agreeing the subledger total to the general ledger. A difference may reflect manual journal entries posted straight to the control account, timing in an interface, or errors. Detail testing such as confirmations and unrecorded liability searches draws on the subledger, so its completeness must be established first. Direct entries to control accounts are a standard journal entry test criterion.

Example

Illustrative: the receivables subledger totals $1,248,300 and the general ledger control account shows $1,262,300. The $14,000 difference traces to a manual adjustment posted to the control account only. Until it is cleared, the aging used for confirmations and the allowance does not support the reported balance.

Common mistakes

  • Using the subledger detail without agreeing it to the control account.
  • Allowing manual entries to a control account with no matching detail.

Sources

  • AICPA, AU-C Section 315, Understanding the Entity and Its Environment (information system, including general ledger and subledgers)
  • AICPA, AU-C Section 330, Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained

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

Standards

AU-C 315AU-C 330

Related terms

  • General ledger
    The general ledger is the master record of all accounts and posted transactions that supports the trial balance and financial statements, and it is the population for journal entry testing in an audit.
  • Account reconciliation
    Account reconciliation compares a ledger balance with independent support, such as a bank statement or subledger, explains each difference, and is a core control over the accuracy of period-end balances.
  • Accounts receivable aging
    An accounts receivable aging lists customer balances by how long they have been outstanding, and auditors use it to select confirmations, test the allowance for credit losses and tie receivables to the ledger.
  • Trial balance
    A trial balance lists every general ledger account with its debit or credit balance at a date, proving total debits equal total credits and providing the starting point for financial statements.

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