This schedule is one of the many that are included in the auditor's working papers and one of the most important. Misstatements detected by the auditor are initially brought to the attention of management. If management does not agree that a misstatement has occurred or otherwise decides not to correct the misstatement, the auditor includes the details of the misstatements on a schedule, or summary, of audit differences. Auditors consider the effect of these misstatements when determining the appropriate audit opinion to include in the audit report. (See The CPA Journal article entitled Evaluating Audit Differences.) For example:
| SCHEDULE OF AUDIT DIFFERENCES | ||||
|---|---|---|---|---|
| WP sch |
Accounts affected/ details of difference | Debit | Credit | Effect on net income |
| Increase (decrease) | ||||
PL5 B17 PL2 C4 PL2 BB1 |
Dr. Bad and doubtful debts
Cr. Provision for bad debts
Underprovision for bad debts in relation
to the following customers:
Archive Systems 9,800
Century Constructions 25,700
36,500
---------------------------------------
Dr. Cost of sales
Cr. Retail inventory
Total of errors found in inventory
count as per details in working papers
(ref C15)
----------------------------------------
Dr. Cost of sales
Cr. Trade accounts payable
Purchases received before balance date
not recorded until after balance date
as per schedule BB8.
----------------------------------------
etc.
|
36,500
57,987
15,608
|
36,500
57,987
15,608
|
(36,500) (57,987) (15,608) |
Note that each misstatement detected by the auditor, whether or not it exceeds the value of planning materiality, is included on this schedule. Non-material misstatements are included because, when aggregated with all other misstatements, the value of the total misstatements may exceed the value of reporting materiality [fn].
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