Sample PBC list
Hmmm…The Annual Financial Audit. Oh, you can almost hear the groan of your accounting department. Then you also remember that big check you had to write to your CPA firm last year. You think, “Remind me, why is it that we need an audit? Why does it cost so much? And why does my accounting department dread it so much?”
If you are a private company, you need an audit because your bankers and your shareholders probably require one. It may cost so much because your auditing firm needs to use a lot of time and staff to complete your audit. Your accounting dept dreads it possibly because they aren’t sure what the auditor will ask for next, accountants don’t like surprises! There is a way to help reduce the cost and the dread, the PBC Checklist.
The Provided by Client list, known to auditors as the PBC is a list of the schedules and spreadsheets that your auditing firm expects you, the company, to provide. Having this list, well in advance of your audit, will allow your company to:
- Avoid surprises by reviewing and reconciling transactions and accounts ahead of the auditor.
- Save money by using your staff to complete the work papers that can then just be audited, and not created, by your higher priced auditors.
- Allow you to get the most from your auditors expertise by allowing them to focus on the analysis of data and not the gathering of data.
- Set expectations on both sides of the audit and open the lines of communication between auditor and audited.
- Finally, the philosophical part, there is much professional learning that can occur during an audit. This learning goes both ways. The auditors see dozens of different companies, and can be helpful in suggesting improvements to your system. Auditors can learn how GAAP works in unique business scenarios which can only help them in future audits and in growing their practice.
What you need to do:
- If you aren’t getting a PBC list from your auditor, ask for one at least two months before the audit begins.
- If you are getting a PBC list from your auditor, be sure it is evolving each year as accounting rules change and as your business changes. It should meet your needs as well as your auditors needs
- Make sure it is in layman’s language, make them convert their “audit-speak” to clear requests.
- Make sure it denotes who does what, and has clear dates for when each item is required.
- Once you get the PBC list, work on the items and have them ready before the start of the audit. Your staff should be free to respond to auditor requests during the fieldwork, not working on list items they should have had done. The quicker your staff responds, the shorter the audit, the lower the fees.
- Hire in some help if you need it. If your accounting staff is swamped with daily work, it will still be cost-effective to bring in some outside help for your audit preparation. Completing your PBC list will bring peace of mind and a sense of control over your annual financial audit.
Related articles
- Significant and Pervasive Audit Deficiencies within Accounting Firms (bjconquest.com)
- Mandatory Auditor Rotation Up For Concept Release (bjconquest.com)
