Mastering audit acronyms is crucial for ensuring clear communication with other accounting professionals. Whether you are a student preparing for exams, a new auditor starting your first role, or a professional looking to strengthen your skills, familiarity with the language of auditing will help you navigate real-world scenarios with greater ease.
By the end of this guide, you’ll be well-versed in essential audit terminology, helping you communicate effectively with colleagues and adapt quickly to your professional environment.
Common Audit Acronyms and Definitions
| SURL | Search for Unrecorded Liabilities |
| P&L | Profit & Loss Statement |
| GL | General Ledger |
| TB | Trial Balance |
| IMM | Immaterial |
| W/P | Workpapers |
| F or ^ | Footed |
| T/M or TM | Tickmark |
| P/F/W | Pass on Further Work |
| PF | Permanent File |
| GAAP | Generally Accepted Accounting Principles |
| SOX | Sarbanes-Oxley Act |
| PCAOB | Public Company Accounting Oversight Board |
| S-CORP | Subchapter Corporation |
| LLC | Limited Liability Company |
SURL: Search for Unrecorded Liabilities
Definition: SURL stands for Search for Unrecorded Liabilities, an audit procedure used to identify liabilities that may not have been recorded at the end of a financial year. Auditors review cash expenditures made after year-end and examine supporting invoices to determine whether any liabilities should have been included in accounts payable. This testing is typically assigned to first-year auditors or interns.
In Practice: During an audit, teams perform SURL procedures by reviewing post-year-end cash disbursements to identify any liabilities that should have been recorded before the financial year closed.
Example Sentence: During fieldwork, the team completed the SURL procedure to verify that no liabilities were omitted from the balance sheet.
P&L: Profit & Loss Statement
Definition: A Profit and Loss (P&L) statement summarizes a company’s revenues, expenses, and net income or loss over a specific period, such as a quarter or a year. It provides a snapshot of financial performance and is a key tool for evaluating operational success.
In Practice: Auditors analyze the P&L statement to assess a company's revenue trends, expense management, and overall financial performance during the audit period.
Example Sentence: We reviewed the P&L to assess trends in revenue growth and expense management.
GL: General Ledger
Definition: The General Ledger (GL) is a complete record of all financial transactions for a company over a given period. It organizes accounts by asset, liability, equity, revenue, and expense categories and forms the foundation of a company’s financial reporting.
In Practice: The audit team reviews entries within the General Ledger to verify the accuracy and completeness of financial transactions across all account categories.
Example Sentence: Make sure you reconcile the vendor balance in the GL before submitting the workpapers.
TB: Trial Balance
Definition: The Trial Balance (TB) is a worksheet that compiles the balances of all ledger accounts into debit and credit columns to verify the mathematical accuracy of the bookkeeping. It helps ensure that total debits equal total credits before financial statement preparation.
In Practice: Auditors use the Trial Balance to verify that total debits and credits are equal before preparing the financial statements.
Example Sentence: The trial balance didn't tie out initially, so we had to locate the error in the postings.
IMM: Immaterial
Definition: In auditing, Immaterial (IMM) refers to errors or discrepancies that are too small to affect the overall reliability of financial statements. Materiality thresholds are set for each engagement to determine what size errors require correction.
In Practice: When discrepancies are deemed immaterial, auditors document the findings without requiring further adjustments or extensive additional procedures.
Example Sentence: Given the immaterial nature of the variance, we documented it and moved forward without further testing.
W/P: Workpapers
Definition: Workpapers (W/P) document the procedures performed, evidence gathered, and conclusions reached during an audit. They form the basis for the auditor’s opinion and are organized into physical or digital files for review and retention.
In Practice: Audit workpapers are compiled to document the procedures performed, evidence obtained, and conclusions reached to support the auditor's opinion.
Example Sentence: Ensure all your conclusions are properly referenced in the W/Ps.
F or ^: Footed
Definition: Footed (F or ^) refers to verifying the mathematical accuracy of a column of numbers by adding the figures and confirming the total. This process ensures the completeness and correctness of calculations in audit workpapers.
In Practice: Auditors "foot" schedules or workpapers by recalculating columns of figures to confirm mathematical accuracy and ensure no errors were made.
Example Sentence: Please foot the accounts receivable schedule before final review.
T/M or TM: Tickmark
Definition: A Tickmark (T/M or TM) is a symbol used in audit workpapers to document specific procedures or findings. Tickmarks help reviewers quickly understand which audit steps were performed and how items were tested or verified.
In Practice: Auditors use tickmarks in workpapers to quickly reference audit steps performed, findings noted, or items tested during the engagement.
Example Sentence: Use the tickmark legend to explain the procedures performed on the cash account.
P/F/W: Pass on Further Work
Definition: Pass on Further Work (P/F/W) indicates that sufficient audit procedures have been completed for a particular area, and no additional testing is necessary. It marks the conclusion of work on a specific section.
In Practice: Once auditors have gathered sufficient evidence for an area, they document a P/F/W notation to indicate that no further procedures are necessary.
Example Sentence: After reviewing the controls testing, we were able to P/F/W on that section.
PF: Permanent File
Definition: The Permanent File (PF) is part of the audit documentation where long-term reference materials, such as incorporation documents, shareholder agreements, and debt covenants, are stored for use across multiple audit periods.
In Practice: Key documents such as incorporation papers, loan agreements, and shareholder information are maintained in the Permanent File for ongoing reference across multiple audits.
Example Sentence: The client's articles of incorporation are stored in the PF for reference.
GAAP: Generally Accepted Accounting Principles
Definition: Generally Accepted Accounting Principles (GAAP) are standardized guidelines, policies, and procedures used for financial reporting in the United States. They ensure consistency, transparency, and comparability in the preparation of financial statements.
In Practice: Auditors evaluate whether a company’s financial statements have been prepared in accordance with GAAP to ensure compliance and consistency.
Example Sentence: Revenue recognition must align with GAAP standards for the audit opinion to be clean.
SOX: Sarbanes-Oxley Act
Definition: The Sarbanes-Oxley Act (SOX) is a U.S. federal law enacted in 2002 to strengthen corporate governance, improve internal controls, and enhance financial reporting following major corporate scandals.
In Practice: Audit teams test internal controls and reporting processes to ensure compliance with the requirements outlined in the Sarbanes-Oxley Act (SOX).
Example Sentence: Our audit procedures included SOX compliance testing for internal controls.
PCAOB: Public Company Accounting Oversight Board
Definition: The Public Company Accounting Oversight Board (PCAOB) is a nonprofit organization that oversees the audits of public companies to protect investors by ensuring the accuracy and independence of audit reports.
In Practice: Public company audits are conducted in accordance with PCAOB standards to maintain audit quality and protect investors’ interests.
Example Sentence: The PCAOB inspection team reviewed our firm's quality control procedures.
S-CORP: Subchapter Corporation
Definition: An S Corporation (S-Corp) is a business entity that passes corporate income, losses, deductions, and credits through to shareholders for federal tax purposes, helping avoid double taxation.
In Practice: Auditors verify that S-Corp elections and related tax treatments are properly documented and reflected in the client’s financial records.
Example Sentence: We verified that the client's S-Corp election was appropriately documented with the IRS.
LLC: Limited Liability Company
Definition: A Limited Liability Company (LLC) is a business structure that offers personal liability protection to its owners while allowing profits and losses to pass through to their personal tax returns. It combines features of corporations and partnerships.
In Practice: During the audit, the team reviews the LLC’s operating agreements and ownership structure to ensure accurate financial reporting.
Example Sentence: The audit included a review of the LLC agreement to confirm ownership percentages.
Audit acronyms are a key part of the language used in the profession. Understanding these terms is essential for navigating audit work, communicating effectively, and building field familiarity as you grow your career.
