What it is
An adjusting entry log records every correction proposed during the close or audit, whether the client posted it or passed on it. This workbook keeps each entry line by line, checks that every entry balances and measures the effect on pretax income, net income, assets and liabilities.
Passed entries feed an evaluation against overall and performance materiality, showing the net and gross pretax effect. Carry each passed entry to the summary of uncorrected misstatements with its income statement and balance sheet effects.
When to use it
- During the year-end close or audit, to track proposed adjustments through to posting.
- When management declines an entry, to record it as passed and evaluate it.
- Before completion, to total the effect of all adjustments on income and the balance sheet.
What’s inside
- Log of 60 entry lines with entry number, date, type, account, class, debit and credit
- Client approval status and a description and reason for each entry
- Entry balance check by entry number
- Effect columns for pretax income, assets and liabilities
- Summary by type and a passed adjustments feed against materiality
Standard cited
This template follows AU-C 450. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use. See AU-C 450 explained.
Questions
What is a passed adjustment?
A passed adjustment is a misstatement the auditor identified that management chose not to record. It is accumulated, evaluated individually and in aggregate against materiality, and communicated to those charged with governance.
How is the pretax income effect computed?
Credit less debit on revenue and expense lines. A credit to an expense account raises income and a debit to it lowers income.
Why can net effects mislead?
Overstatements and understatements offset in a net total. The feed shows a gross figure on a line basis as well. Evaluate each entry on its own and consider qualitative factors.
Where do passed entries go next?
To the summary of uncorrected misstatements, with the effect on each financial statement line, for the evaluation and the written representation.
Related templates
- Summary of Uncorrected Misstatements (AU-C 450)
- Journal Entry Testing Workpaper (AU-C 240)
- Audit Materiality Worksheet (AU-C 320)
- Year-End Close Checklist (Excel)
Last updated 11/05/2026. All free templates.