A PBC request, short for “Prepared By Client,” is the list of documents, schedules, and explanations your external auditors need you to gather before and during an audit. It usually arrives four to eight weeks before fieldwork starts. How completely and how quickly you respond to it drives how long the audit takes and what it costs.
Why Auditors Send a PBC List
Auditors have to obtain enough quality evidence to support the opinion they issue on your financial statements.1Public Company Accounting Oversight Board. AS 1105 – Audit Evidence They can’t take your word for it. They need bank statements, contracts, schedules, and calculations they can independently test. The PBC list is how they organize those requests so nothing gets missed.
Each item on the list ties to a specific financial statement line or audit risk area. An aged receivables schedule supports the accounts receivable balance. Bank reconciliations support cash. Loan agreements support debt disclosures. The structure mirrors the way auditors plan their testing, so treating the list as a roadmap of what they intend to examine is closer to the truth than treating it as paperwork.
Most firms send the list well before the audit team arrives. The idea is that your team gathers and organizes everything in advance so the auditors can start testing on day one instead of waiting for documents. Some items get requested during interim fieldwork earlier in the year, with a second round focused on year-end balances.
What’s Typically on the List
PBC lists vary with your industry, size, and risk profile, but the core categories show up in almost every engagement.
General Corporate Documents
Foundational items that show auditors your governance structure and control environment: organizational chart, board minutes, audit committee minutes, and any written descriptions or flowcharts of key financial processes. For recurring audits, the focus is on changes from the prior year.
Cash and Bank Accounts
Bank statements and reconciliations, usually for the final month of the audit period and sometimes one or two additional months. Auditors also send confirmation letters directly to your banks to verify balances; your role is to authorize the bank to respond.2Public Company Accounting Oversight Board. AS 2310 – The Auditors Use of Confirmation
Revenue and Receivables
Revenue is one of the highest-risk areas in an audit, so expect detailed requests. You’ll need an aged accounts receivable listing that ties to the general ledger, plus management’s calculation behind the allowance for doubtful accounts. Auditors assess whether those assumptions are reasonable and consistent with your collection history.3Public Company Accounting Oversight Board. AS 2501 – Auditing Accounting Estimates, Including Fair Value Measurements They’ll also pull specific invoices, shipping records, and contracts to test cutoff, and send confirmations to a sample of customers.
Expenses, Payables, and Payroll
An aged accounts payable listing so auditors can check that obligations are recorded. Larger balances may go out for vendor confirmation. Expect to hand over a payroll register and documentation supporting benefit expenses.
Property and Fixed Assets
A fixed asset schedule showing additions, disposals, and transfers during the period, plus accumulated depreciation and the methods used. Auditors test additions against invoices and purchase agreements and check that gains or losses on disposals were calculated correctly. Have supporting contracts and invoices for significant capital expenditures ready; those get pulled almost every time.
Debt and Lease Agreements
Copies of significant loan agreements, lines of credit, and lease contracts. Auditors review classification and disclosure and test debt covenant calculations for compliance. Flag any refinancings, amendments, or new borrowings proactively so the accounting and disclosure implications can be evaluated.
Legal Matters and Contingencies
Auditors are required to send a letter of inquiry to your outside counsel about pending or threatened litigation, claims, and assessments. You authorize your attorneys to respond. If an attorney refuses, that alone creates a scope limitation serious enough to prevent an unqualified opinion.4Public Company Accounting Oversight Board. AS 2505 – Inquiry of a Clients Lawyer Concerning Litigation, Claims, and Assessments Expect a request for a summary of legal invoices too. Auditors use those as indirect evidence to identify matters management may not have disclosed.
Related Party Transactions
Auditors identify and evaluate transactions between your company and its related parties: owners, officers, affiliates, family members of key personnel, and entities with significant influence over operations.5Public Company Accounting Oversight Board. AS 2410 – Related Parties Your submission should list all related parties, describe transactions with them during the period, and include supporting contracts. Incomplete related party disclosures are a common finding, partly because companies underestimate how broadly the term is defined. When in doubt, disclose it and let the auditors judge materiality.
Tax Documentation
Filed tax returns, extensions, tax provision workpapers, and correspondence with taxing authorities. Auditors review the provision to verify income tax expense and deferred tax balances. Multi-jurisdiction operations bring additional requests, such as nexus studies or transfer pricing documentation.
The Management Representation Letter
One item that catches many first-time audit clients off guard is the management representation letter. This is a formal written statement from your CEO and CFO (or equivalent officers) confirming that management has provided all relevant financial records, disclosed all related party relationships, and believes the financial statements are fairly presented.6Public Company Accounting Oversight Board. AS 2805 – Management Representations
The auditors draft the letter; management signs it. It’s dated as of the audit report date and covers every period included in the financial statements. It also addresses specific items like unrecorded transactions, communications from regulators, and any side agreements not already disclosed. If management refuses to sign, the auditor cannot issue an unqualified opinion. Read every line before you sign, and raise any concerns with your auditors before the signing date.
First-Year Audits Bring a Longer List
If this is your company’s first external audit, expect a significantly longer PBC list. Auditors need everything a recurring client provides plus foundational documents they’d otherwise already have on file: articles of incorporation, bylaws, stock certificates, significant historical contracts, and prior-year financial statements even if unaudited. They also verify opening balances for the comparative period, which can pull in documentation going back two years or more.
Allow at least six to eight weeks to gather everything. The volume is genuinely larger, and many of these documents live in places your accounting team doesn’t usually touch, like corporate formation files or old lease binders. Identifying early who in the organization can locate each type of document saves real time later.
How to Respond Well
Designate one person as your PBC coordinator. That person is the single point of contact between your team and the auditors, channels requests internally, and manages the flow of documents back out. Without a coordinator, requests bounce between departments, things get lost, and the auditors end up chasing five different people for one schedule.
Label and organize every document to match the item number on the PBC list. If the auditors number their requests 1.a, 1.b, 2.a, name your files the same way. Financial schedules like depreciation calculations, accrual rollforwards, and account reconciliations should be in editable formats, typically Excel, so the auditors can test formulas and trace inputs to source data. Sending a PDF of an Excel schedule forces the auditor to rebuild the workbook, which you’ll pay for in hours.
Before anything leaves your office, management should review every schedule for accuracy. Every client-prepared schedule must reconcile to the general ledger and the final trial balance. When an auditor finds that your receivables aging doesn’t tie, the first result is a string of follow-up questions. The second is a note in the audit file about the quality of your internal records.
When You Can’t Produce a Requested Item
Not every request will be easy. A contract may be lost, a key employee may have left, or a system migration may have made historical data hard to reach. The worst move is silence. Auditors always notice a blank item.
Flag the issue with your coordinator right away and tell the audit team. Auditors have alternative procedures they can use when specific evidence isn’t available. If a customer doesn’t respond to a receivables confirmation, for instance, the auditor can verify the balance by examining subsequent cash receipts, shipping documents, or other records.2Public Company Accounting Oversight Board. AS 2310 – The Auditors Use of Confirmation The key is enough lead time to plan those alternatives. A missing document disclosed on day one is manageable. The same document discovered in the final week can delay the engagement.
Submission and Follow-Up
Use whatever secure portal your audit firm provides rather than emailing sensitive financial data. Most major firms maintain encrypted client portals, and asking about a portal’s security certifications is reasonable. Sending bank statements, payroll data, and tax returns over unencrypted email creates unnecessary risk for both sides.
After the initial submission, the audit team reviews and tests what you sent. That generates follow-up questions, sometimes called queries or open items, requesting clarification, revised schedules, or more supporting documentation. Address them promptly. Slow responses to follow-up questions are one of the biggest drivers of audit fee overruns, because the audit team can’t close out testing and move on. Every day an open item sits unresolved, someone on the team is idle or being reassigned to another engagement, which makes it harder to get them back on yours.
The process is complete only when the audit team formally confirms that all items have been received and the evidence is sufficient to support their opinion.
What Happens When Submissions Are Late or Incomplete
Delays and gaps create consequences beyond a frustrated audit team. When auditors can’t get the evidence they need, they reschedule staff during busy periods, and those billing inefficiencies get passed along. Problematic audits with repeated delays can cost several times the original fee estimate.
More seriously, if the auditor ultimately can’t obtain enough evidence on a material area, the result is a scope limitation. Depending on severity, the auditor may issue a qualified opinion, meaning the financials are fairly stated except for the area they couldn’t fully test, or disclaim an opinion entirely, meaning they can’t express any conclusion. When the company itself is the reason the auditor couldn’t access evidence, as opposed to circumstances beyond anyone’s control, a disclaimer becomes more likely.7Public Company Accounting Oversight Board. AS 3105 – Departures from Unqualified Opinions and Other Reporting Circumstances A qualified opinion or disclaimer can trigger loan covenant violations, regulatory concerns, and credibility problems with investors or grantors.