What it is
AU-C 240 requires the auditor to test the appropriateness of journal entries recorded in the general ledger and other adjustments made in preparing the financial statements, as a response to the risk of management override of controls.
This workbook documents the process from start to finish: understanding of the close process, the risk-based selection criteria, a check that the journal entry population is complete (opening balances plus activity equals closing balances), the entries selected and the results of testing each one.
When to use it
- On every audit: journal entry testing is required because management override cannot be rebutted.
- With data analytics output, as the documentation layer around the filters you ran.
What’s inside
- Understanding of the journal entry process and who can post
- Selection criteria with rationale and number of entries hit
- Population completeness tie-out: beginning TB + net activity = ending TB
- Selections log with test attributes (support, approval, business purpose, period)
- Results summary and conclusion
Standard cited
This template follows AU-C 240. 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 240 explained.
Questions
What criteria are used to select journal entries?
Typical characteristics include entries posted to unrelated, unusual or seldom-used accounts; entries by people who do not usually post; entries at or after period end or in post-closing; round amounts or consistent ending numbers; entries with little or no description; and entries posted outside normal hours. Pick criteria from your fraud risk assessment, not a fixed list.
Why test completeness of the journal entry population?
If the data set is incomplete, entries could be missing from your filters. Reconciling opening balances plus all journal activity to the closing trial balance shows that every entry in the period is in the population.
Related templates
- Fraud Inquiry and Brainstorming Documentation (AU-C 240)
- Trial Balance Template with Mapping (Excel)
- Summary of Uncorrected Misstatements (AU-C 450)
Last updated 11/04/2026. All free templates.