The PBC list is a list of requested items (bank reconciliations, AR aging, etc.) your third party CPA needs to successfully complete your compilation, review, or audit. These lists vary significantly depending on the line of service and the complexity of your entity.
C- Requested during a Compilation
R- Requested during a Review
A- Requested during an Audit
Every CPA firm is different so your CPA may request more or less than what is shown for each type of engagement. The following list is only meant to be a guide on what to anticipate and it is likely that I have not included everything your CPA will need.
We'll start with some general reports and then move to the balance sheet and the income statement. For these examples, we'll assume year end of December 31, 2022.
Trial Balance as of 12/31/22 (C, R, A)
General Ledger Detail from 1/1/2022 through 12/31/22 (R, A)
Cash
1) 12/31/22 bank reconciliation and bank statement and 1/31/23 bank reconciliation statement. (A)
Note: If you have a history of multiple journal entries, including entries to cash, your CPA performing a Review may request to see the reconciliations along with the bank statements.
Accounts Receivable (Contracts Receivable)
1) Accounts Receivable Aging Summary as of 12/31/22 and subsequent date (R, A)
2) Accounts Receivable Confirmations (A)- Prepared by you and verified for accuracy by your CPA prior to sending to your customer.
3) Underlying invoices for outstanding receivables as of 12/31/22 and support for subsequent receipts after year end. (A)
Prepaids
1) Schedule of prepaid expenses to include payment amounts and amounts
expensed (A).
Property and Equipment (Fixed Assets)
1) Fixed Asset roll-forward, which includes the following information (C, R, A):
a) Beginning fixed asset balance
b) Purchases by category (Vehicles, equipment, furniture, etc)
c) Disposals by category
d) Ending balance that agrees with the trial balance
e) Detail of additions and disposals, along with the proceeds received and
depreciation at the time of the disposal.
Note: Most clients have their third party CPA maintain their fixed asset details for the purpose of calculating book and tax depreciation. For that reason, I've indicated that the rollforward is relevant for compilations, reviews and audits.
Accounts Payable
1) Accounts Payable summary aging report as of 12/31/22 (R, A)
2) Subsequent disbursement detail from cash accounts. This detail includes
payments made to vendors after year end. If you have a 12/31/22 year end, you
would run reports through 1/31/23 or 2/15/23, depending on when the audit
starts (A)
Long-Term Debt
1) Note Payable Rollforward (C, R, A):
a) Beginning balances for notes
b) Amounts financed with new notes and finance documents
c) Payment amounts (ONLY principal payments)
d) Ending balances that agree to the trial balance
Equity or Retained Earnings
1) Make sure your retained earnings "rolls" from the prior year (C, R, A)
Contract Related
1) Work in progress schedule and closed job summary. If you provide your CPA with
contract schedules be sure that they agree to the trial balance before sending it
out (C, R, A)
2) Job listing with contract billings and costs for the current year (or inception to date
depending on how you ran the report) (C, R, A)
Related Party Transactions
1) Detail related to related party transactions including amounts (C, R, A)
If nothing else, expect a request for the items listed above. It's always best to look over what your CPA has requested in the past to give you an idea of what is to be expected for this year's engagement.
You should be familiar with these items as well if you keep your books up to date. They are important for maintaining accurate information throughout the year and can help expedite the compilation, review or audit engagement!
As always, if you have any questions, please feel free to reach out! Thanks!