audit pbc list

Audit PBC List

Auditors, like most financial professionals, are overrun by acronyms. They’ll have no shortage of abbreviations and shortcuts as they subject your ledger to their review.

The most prevalent one — especially as it pertains to your business — is PBC. It stands for “provided by client.” The first time you’re likely to encounter this acronym will probably be when the auditor sends you something called an audit PBC list. 

What is an Audit PBC List?

An audit PBC list is a formal documentation request that your auditor makes before starting the audit procedure. It serves as a kind of audit checklist.

There are no set standards for which kinds of documents and records your auditor will request. Every business has a unique financial structure. In general, any documentation that relates to or affects the finances of your business finances is likely to appear on the PBC list.

Even though there are no set guidelines, you can expect the list of requested items to include reports and documents related to:

  • Revenue and income
  • Expenses
  • Cash flow
  • Loans
  • Debt agreements
  • Schedules
  • Procedures
  • Contracts

The audit PBC list is dynamic. It’s subject to change as the auditor works through the auditing process. They’ll change or add to the audit checklist as they go.

The purpose of this audit checklist is to make your auditor’s job a little easier. But it can also make your life simpler. If you use the list to prepare and consolidate your documentation in advance of the audit, the process becomes more efficient and takes less time. That, in turn, can save you additional expenses for the audit. 

Manage Your Auditor

audit pbc listJust like the audit process in general, the PBC list can be a source of anxiety, especially when it’s extensive. But it can also be an opportunity for you to take control of the pacing and execution of the audit.

You can exert some authority by managing how your auditor submits their requests. Here are a few strategies for doing so.

Require the audit PBC List to Be Sent at the End of the Fiscal Year

You (or your accountant) will be preparing annual reports and closing out your books when your fiscal year is closing. You’ll have the required information close at hand during that time. By mandating that the PBC be issued then, you can set the required documentation aside so it will be easier to collect and submit.

Require Due Dates for Listed Items

Make sure that your auditor is unambiguous about deadlines. Ask them to set a due date for each specific item on the list. Don’t accept a blanket statement like, “Just have everything done by January 30.” That’s a sign of a disorganized auditor (and a potentially long audit process). A competent auditor will know at which points in the process they’ll need to get certain documents.

Set a Deadline for the PBC List

Your auditor should forward the audit checklist no later than four weeks before the audit is set to begin. This will give you some breathing room and time to gather the required information. Make sure that this deadline is conveyed to and acknowledged by the auditor.

audit pbc listGet a Schedule for Each Stage of the Audit

Auditors are very methodical. They have very systematic timelines for how they’ll handle the different parts of their audit. Ask your auditor to provide you with a complete timetable outlining when they’ll be reviewing certain areas. This will allow you to make your accountant or financial manager available to answer questions when they arise. 

Audit Yourself Before the Auditor Does

Balance sheets provide the pathways that your auditor will take when the process begins. The PBC checklist will require all of the supporting documents that relate to your balance sheets. They’ll check every sheet to verify that there is sufficient information to back up your financial claims.

A great way to ensure that they’ll have the information is to audit yourself before the auditor arrives. Confirm that every balance sheet has sufficient supporting documentation, with no exceptions. Certify that every account has a document associated with it.

Along with making your financials as air-tight as possible, this process will also give you a better understanding of the auditing process. You’ll know what to expect from the auditor, putting the focus squarely on them as they conduct their business. That can save you both a lot of time.

Need assistance in preparing for an audit? Talk to one of our Fractional CFOs today!

Additional Resources: