What Is a PBC List in an Accounting Audit?

A Prepared By Client (PBC) list is a fundamental element in the accounting audit process. It represents a structured request from external auditors or accountants to their clients, outlining the specific financial documents, data, and information needed for a thorough review or audit of financial statements. This process helps ensure that the necessary information is compiled and provided efficiently, contributing to a smoother financial examination.

Understanding PBC

PBC stands for “Prepared By Client,” referring to the collection of financial materials that a client, the entity undergoing an audit or review, gathers and submits to their external accounting firm. These materials are typically items the client already maintains or can readily generate from their own internal record-keeping systems. The PBC list acts as a comprehensive guide, detailing the precise documentation required by the auditors to perform their work effectively and accurately.

The Purpose of PBC

Auditors and accountants request PBC documentation primarily to enhance the efficiency and accuracy of the audit process. Providing these documents upfront expedites the review by giving auditors immediate access to necessary data, which can reduce the overall time spent on the engagement. A well-organized PBC submission ensures auditors have comprehensive information to verify financial statements and assess internal controls, thereby improving the precision of audit outcomes. Ultimately, an efficient PBC process can lead to reduced audit hours and potentially lower audit fees for the client.

Common PBC Request Categories

PBC lists generally categorize requests to cover various aspects of a company’s financial operations. Common requests include:

• General ledger details and trial balances, which provide a summary of all financial accounts.
• Bank statements and associated reconciliations to verify cash balances and transactions.
• Accounts receivable and accounts payable aging reports are routinely requested to assess outstanding balances from customers and to suppliers.
• Payroll records are also typically part of the request, along with fixed asset listings that detail a company’s tangible assets and their depreciation.
• Additionally, auditors may seek copies of legal documents or contracts, such as loan agreements or lease contracts, and past tax returns to understand financial obligations and compliance.

Preparing PBC Documents

Effective preparation of PBC documents involves several practical steps for clients:

• Organizing files clearly and logically, often with proper labeling, is important for both physical and digital submissions.
• Timeliness in providing all requested documents is also paramount to prevent delays in the audit timeline.
• Clients should ensure that all items on the PBC list are complete and accurate to minimize follow-up questions from the audit team.
• Maintaining open communication with the auditing firm is advisable for clarifying any requests or addressing potential issues promptly.
• Documents can be submitted in various formats, though digital submissions are increasingly common, often through secure client portals provided by the audit firm.