At the onset of an engagement, LBMC provides a PBC list (“prepared by client”) to company management. While not fully comprehensive in a first-year audit, this generally provides a detailed list of initial information we need to begin the audit and is organized by financial statement audit area. In preparing for the audit, we ask questions to determine the types of requests needed to address risks and key audit areas identified.
PBC list recommendations include:
- Maintaining information electronically, which provides for easy upload to audit share sites
While most companies are moving towards maintaining electronic financial records instead of paper records, smaller start-up companies may not have a formal reconciliation and document retention process due to lack of resources. As your company prepares for the initial audit, consider scanning information electronically or moving to electronic records when available to provide for a smoother transition.
- Reviewing the PBC list directly with the auditors
Review the PBC list with the auditors to identify items that are not driven by existing company reconciliations/analyses and begin working on those items first as they typically require more preparation time.
- Asking for further clarity when the purpose of a request is unknown.
Additionally, consider asking the auditor follow-up questions to requests that aren’t clear, as there may be an easier way to provide the requested information or an alternative based on how the company typically reviews a certain metric. Discussions such as these with your auditors will not only reduce the preparation time on your end but also assist the auditors with understanding your business and metrics that are important to management.
Working through any issues or questions during the first year of an engagement will help make the PBC list more tailored to your company and easier to tackle in future years.