What it is
AU-C 450 requires the auditor to accumulate misstatements identified during the audit, other than clearly trivial ones, ask management to correct them, and evaluate the effect of those left uncorrected.
This workbook lists each uncorrected misstatement by type (factual, judgmental, projected), shows the effect on each statement caption, totals them and compares the totals with materiality. It attaches to the management representation letter.
When to use it
- Throughout the audit as misstatements are found.
- At completion, to evaluate uncorrected items and attach to the representation letter and the AU-C 260 letter.
What’s inside
- Materiality inputs: overall, performance and clearly trivial threshold
- Misstatement log: description, W/P ref, type, Dr / (Cr) effect by caption
- Effect on income before taxes, current year and prior-year carryover
- Totals vs materiality, with qualitative factor prompts
- Corrected misstatements log
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 the difference between factual, judgmental and projected misstatements?
Factual misstatements are certain. Judgmental misstatements arise from differences in judgment about estimates or policy. Projected misstatements are the auditor’s best estimate for a population, extrapolated from a sample.
Should prior-year uncorrected misstatements be considered?
Yes. AU-C 450 requires considering the effect of uncorrected misstatements related to prior periods on the relevant classes, balances and disclosures, and on the statements as a whole.
Related templates
- Management Representation Letter (AU-C 580)
- Lead Schedule Template (Excel)
- Communication With Those Charged With Governance (AU-C 260)
Last updated 11/04/2026. All free templates.