Glossary
Audit Support and the PBC List: What Your Auditor Needs Before Fieldwork
PBC stands for “prepared by client”: the schedules, reconciliations and source documents your external auditor asks the company to produce. Audit support is the work of preparing that package and answering the auditor’s follow-up questions. Treewalk does that preparation work. We do not audit.
That separation matters. The auditor examines the financial statements and issues the opinion. The company, and anyone it hires to help, prepares the statements and the support. Auditor independence depends on the services, the client and the applicable rules. Preparing records or statements can create a self-review threat, and some services are prohibited for reporting issuers or listed entities. Management retains responsibility for the financial statements; using a separate preparer does not itself settle every independence issue. See CPABC’s independence rules.
What does PBC mean in an audit?
The PBC list is the auditor’s request list. It usually arrives before fieldwork and names each schedule, reconciliation and document the audit team expects to receive. Items are added as the audit progresses and questions come up.
Numeric schedules should reconcile to the relevant ledger or trial-balance figures, have supporting records, and be explainable by someone who knows how they were built. Other requests, such as minutes and agreements, need the correct entity, period and complete document. An audit slows down when any of those breaks.
What is on a typical PBC list?
Every auditor’s list is different, and the auditor decides what they need. The table below shows common items, what the auditor generally uses each for, and the gap we look to close before the list is answered.
| PBC item | What the auditor uses it for | Gap to close before fieldwork |
|---|---|---|
| Trial balance and general ledger | Starting point; every other schedule ties back to it | Final adjusting entries posted; no suspense or clearing balances left unexplained |
| Bank reconciliations at year end | Confirms cash; supports bank confirmations | Every account reconciled for the year-end month, with outstanding items supported and cleared after year end |
| Accounts receivable aging | Existence and collectability of receivables | Credit balances and unapplied payments cleaned up; doubtful amounts reviewed |
| Accounts payable listing and post-year-end payments | Completeness of liabilities (unrecorded bills) | Bills and expense claims that relate to the year but arrived or were paid after year end identified and recorded |
| Accruals and prepaid schedules | Cut-off and completeness of expenses | A schedule behind every accrual and prepaid; amounts that only ever get adjusted at year end reconciled |
| Fixed asset continuity | Additions, disposals and depreciation | Additions supported by invoices; continuity agrees to the ledger |
| Inventory count and valuation | Existence and valuation of inventory | Count results reconciled to the ledger and any count adjustment explained |
| Debt agreements and covenant calculations | Classification and disclosure of debt | Covenant calculations prepared from the final numbers |
| Leases | Lease liabilities and related entries | A schedule supporting year-end lease entries rather than a single adjustment with no backup |
| Revenue contracts and cut-off support | Revenue recognised in the right period | Invoices near year end matched to the period the work was performed |
| Payroll reconciliation | Wages, remittances and year-end slips | Payroll register reconciled to the ledger and remittances |
| Intercompany and consolidation schedules | Eliminations and consolidated balances | Both sides of intercompany balances agree; foreign or differently dated entities brought into the working papers |
| Equity continuity, minutes and agreements | Share capital, options, warrants and approvals | Continuity schedule agrees to the register and to board and audit committee resolutions |
For public companies, the package usually extends to the draft financial statements, notes, MD&A and the CEO and CFO certificates.
What gaps do we close before the auditor arrives?
When our team prepares a company for its audit, these are the problems we look for first, because each one turns a routine PBC item into a string of follow-up questions:
- Balances that are only corrected once a year. In our review work we have seen payables and similar balances kept on a cash basis through the year and fixed in one year-end entry. A year-end entry can be supported, but it does not repair the intervening monthly reporting. Preserve the invoice-level reconciliation and cut-off evidence behind the adjustment.
- Clearing accounts that never clear. Undeposited funds or similar accounts accumulate unmatched items and get cleared out at year end with little explanation.
- Receivables with credit balances. Payments received but not applied to invoices leave negative amounts sitting in receivables.
- Expenses parked in the balance sheet. A cost recorded as a prepaid instead of an expense keeps building until someone notices the balance does not make sense.
- Missing cut-off support. We ask for every invoice and expense claim that was unpaid at year end, or paid after year end but relating to the year, so the liabilities are complete before the auditor tests them.
- Reconciliations done only for the audit. Reconciling accounts at least quarterly, rather than once at year end, keeps the year-end file from becoming a rebuild.
- Entities on a different timetable. Subsidiaries with their own bookkeepers or different year ends need their records in the working papers before the consolidation can be finished.
Where the accounting is complex, our financial reporting team also prepares the accounting adjustments and technical memos the auditor will want to read, so the reasoning is on file rather than explained after the fact.
What makes a PBC item ready?
In an audit-preparation discussion, our financial reporting lead described how an issue needing a technical memo or additional documents can create another round of requests. The practical question is whether the item is supported well enough for the auditor to examine without first rebuilding it.
Before marking an item ready, check:
- The entity and period are correct.
- Numeric schedules reconcile to the relevant final ledger figures.
- Supporting records are accessible and labelled.
- A named preparer can explain the method and a reviewer has checked it.
- Open questions are listed rather than hidden in a balancing entry.
Agree the auditor’s actual requirements and request status with them. Preparation can reduce avoidable follow-up, but it does not determine the scope of the independent audit or guarantee a completion date.
How does Treewalk fit alongside your auditor?
We prepare; your auditor audits. Our financial reporting team compiles the working papers and PBC package, prepares interim and annual financial statements (often under IFRS for public issuers), drafts adjustments and memos, and acts as the day-to-day contact for the audit team’s requests. How much of that you hand over is your choice. The engagement can include day-to-day request coordination, while management approves the financial statements and accounting decisions. The auditor controls its own audit procedures and conclusions.
Much of our audit preparation work is for junior public companies, where quarterly and annual filing deadlines leave little room for a late file. Private companies with a lender or investor audit use the same work for the same reason. See our public companies and private companies pages for how we work with each.
Frequently asked questions
What does PBC stand for in accounting?
Prepared by client. It refers to the schedules, reconciliations and documents an auditor asks the company to produce for the audit.
Is audit support the same as an audit?
No. An audit is an independent examination that ends in an auditor’s opinion. Audit support is the preparation and coordination that gets the company ready for it. Treewalk provides audit support only; an independent audit firm performs the audit.
Does using an audit-prep provider affect auditor independence?
It can help separate preparation and assurance responsibilities, but it does not automatically establish independence. The auditor assesses applicable prohibitions and threats, including other services and relationships. Management remains responsible for the statements and decisions.
Is PBC compilation the same as a compilation engagement?
No. A compilation engagement is a separate service that results in a compilation report (see CSRS 4200 compilation engagements). “PBC compilation” here means assembling the audit package for your auditor.
Can you help if the audit is already behind?
Yes. Rebuilding reconciliations and support for an audit that has stalled is part of the work, although it is less predictable than starting with a current file.
Where to next
If an audit is coming and the file is not ready, talk to us about audit preparation for public companies or contact us. Related reading: IFRS financial statement preparation, audit committee liaison and SEDAR+ filing support.
