Financial Audit Preparation Checklist
An audit preparation checklist for small finance teams. Plan with the auditor, build the PBC list, prepare reconciliations and evidence, and close findings.
- Typical schedule yearly
- The checklist 5 sections, 25 items
- Variables
{{fiscal_year}}{{auditor}}
Use this checklist when an external auditor is due to review your annual financial statements, or for a review engagement by your accountant. It starts weeks before fieldwork, when you agree the timetable and receive the auditor's request list, and ends when the findings are closed. It assumes the year-end close is done or nearly done.
Who owns it
The finance lead or controller owns the audit and is the single contact for the auditor. Individual requests go to the people who hold the evidence: HR for payroll, operations for inventory, the founders for board minutes and contracts. Track each request in the run so nobody has to ask twice.
Common pitfalls
- Treating the PBC list as a to-do list for the last week. The "prepared by client" list arrives early for a reason. Most items can be prepared before the year-end close is finished.
- Evidence that does not tie to the ledger. Every schedule you hand over should agree to the trial balance. Auditors test that first, and differences cost time and fees.
- Many contacts, mixed messages. When the auditor emails several people, answers conflict. Route all requests through one owner and one shared folder.
- Ignoring last year's findings. Auditors check whether earlier recommendations were addressed. Fix them before fieldwork, or explain why not.
Adapt this to your jurisdiction and your audit scope; it is a practical checklist, not legal or audit advice.
The checklist: Audit preparation {{fiscal_year}} with {{auditor}}
Plan
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Agree the audit timetable with
{{auditor}}: planning, fieldwork, draft report and sign-off dates -
Receive the PBC (prepared by client) request list and assign an owner to each item
-
Set up one shared folder for audit evidence with a clear naming scheme
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Review last year's management letter and confirm the status of each finding
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Inform the people who hold evidence (HR, operations, management) of the dates and their requests
Prepare the numbers
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Finalise the trial balance for
{{fiscal_year}}and freeze further postings -
Prepare reconciliations for every balance sheet account, each agreeing to the trial balance
-
Prepare the fixed asset register with additions and disposals supported by invoices
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Prepare the aged receivables and payables listings at year end
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Prepare schedules for accruals, prepayments, provisions and deferred revenue with calculations
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Prepare stock count sheets and the valuation calculation optional
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Prepare the draft financial statements and an explanation of significant movements
Gather evidence
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Collect year-end bank statements and arrange bank confirmations if the auditor requests them
-
Collect significant contracts signed in
{{fiscal_year}}: leases, loans, major customers and suppliers -
Collect board and shareholder minutes for
{{fiscal_year}}and up to the audit date -
Collect payroll year-end reports and a reconciliation to the ledger
-
Collect tax returns, assessments and correspondence with the tax authorities
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Prepare a list of related-party transactions and balances
During fieldwork
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Hold a kick-off meeting with
{{auditor}}and confirm the contacts for each area -
Track open requests daily and answer within the agreed time
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Review proposed audit adjustments and post the agreed ones
Close out
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Review the draft audit report and financial statements before sign-off
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Provide the signed management representation letter
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Record each finding in the management letter with an owner and a due date
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Archive the audit file and note improvements for next year's preparation
Checklist as Markdown
Frequently asked questions
What is a PBC list in an audit?
PBC stands for "prepared by client". It is the auditor's list of schedules, reconciliations and documents that the company must provide, such as the trial balance, bank statements, fixed asset register and contracts. Getting the PBC list early and working through it before fieldwork is the most effective way to shorten an audit.
How far in advance should we prepare for an audit?
Start planning a couple of months before fieldwork. Agree dates, get the PBC list and assign owners. Much of the evidence, such as contracts, minutes and the fixed asset register, can be gathered before the year-end close is finished. The numbers-based schedules come together in the weeks after year end.
What do auditors look at first?
Auditors usually start by agreeing your financial statements to the trial balance, and the trial balance to the supporting reconciliations. They then test significant balances and transactions, such as revenue, cash, receivables and large accruals. Clean, tied-out reconciliations make every later step faster.
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