The short answer
Start with the external CPA firm's current request list and confirm its entities, periods, deadlines, priorities, portal instructions, naming rules, and status labels. Preserve each request ID in one tracker, then assign a company owner, preparer, reviewer, due date, status, submitted version, reconciliation reference, and next action. Reconcile and review each schedule before release, label preliminary information clearly, and keep follow-up active through final open-item review.
Key takeaways
- Preserve the external CPA firm's request number and wording; its current instructions and dates govern the workflow.
- Give every request a company owner, preparer, reviewer, due milestone, current status, and next action.
- Release schedules after the entity, period, source, reconciliation, review, version, and delivery checks are complete.
- Record the exact file and version delivered through the approved channel and keep submitted items active through follow-up.
- Raise dependencies, preliminary information, and unresolved accounting matters at the earliest agreed checkpoint.
PBC commonly means “prepared by client.” External CPA firms use the term for schedules, records, explanations, and other information requested from management. Terminology varies, so use the labels and instructions in the external firm’s current request list.
Treat the PBC list as a controlled workflow from receipt through final open-item review. Management coordinates the company’s response and retains responsibility for its records, financial statements, controls, representations, approvals, and decisions. The separate external CPA firm determines its procedures, evaluates information and evidence, reaches its conclusions, and issues its report.
If the company has not yet received a current request list, begin with our first-external-audit guide and Financial Readiness overview.
Confirm operating rules before assigning the work
Preserve the original list and record management information in separate fields. Confirm the following with the external firm:
- Entities, reporting periods, currencies, and the expected financial-statement framework.
- Fieldwork dates, interim milestones, priorities, and known dependencies.
- Portal structure, permitted file formats, naming rules, and access permissions.
- Company and external-firm contacts for questions and escalation.
- Status definitions and the method for adding or revising requests.
- Instructions for samples, confirmations, and information expected from third parties.
- The label and planned delivery date for any preliminary schedule the external firm agrees to receive.
A prior-year list can help locate recurring information. Use the current list for the requests, wording, priorities, and dates management is expected to address. Initial engagements may also include opening-balance and historical requests that do not appear in a recurring audit.
Build one working tracker around the actual request list
Use the external portal’s workflow when it already gives management adequate ownership, status, version, and follow-up visibility. Otherwise, maintain one internal tracker and record the matching portal submission details.
Each tracker row should preserve the external firm’s wording and add the company fields needed to assign, prepare, review, deliver, and follow up on the request. The examples below show an item in internal review and a submitted item with follow-up.
| Request ID and original wording | Entity, period, and priority milestone | Company owner, preparer, and internal reviewer | Due date and status | Version and date prepared | Reconciliation reference | Approved location and external-firm follow-up | Next action and next-action owner |
|---|---|---|---|---|---|---|---|
| PBC-014 — Provide the year-end accounts-receivable aging and reconciliation to the general ledger | Operating Company; year ended December 31, 20X6; agreed pre-fieldwork checkpoint | Owner: Controller; preparer: Senior accountant; reviewer: Accounting manager | Due February 12, 20X7; Internal review | PBC-014_OperatingCo_20X6_AR-Aging_v02_20X7-02-10.xlsx; prepared February 10, 20X7 | AR-12; reconciling item identified and assigned | External portal folder PBC-014; no follow-up received | Resolve reconciling item and complete final review; Senior accountant |
| PBC-057 — Provide support for the selected payroll items | Operating Company; selected 20X6 payroll periods; fieldwork follow-up | Owner: Head of people; preparer: Payroll manager; reviewer: Controller | Response due February 19, 20X7; Auditor follow-up | PBC-057_OperatingCo_20X6_Payroll-Support_v02_20X7-02-18.zip; prepared February 18, 20X7 | PAY-09; selected items cross-referenced | Restricted payroll portal folder; clarification received February 17 | Answer clarification against v02 and record response; Payroll manager |
One company coordinator should keep the tracker aligned with the portal and resolve logistics across preparers and reviewers. The coordinator organizes communications without screening or restricting the external CPA firm’s direct access to management or other company personnel it considers necessary.
Use status labels that show the next stage of work
The external firm’s labels prevail when its portal defines them. The following internal taxonomy can fill gaps in the company’s preparation view:
- Not started — an owner is assigned and preparation has yet to begin.
- In preparation — records are being assembled or accounting work remains underway.
- Internal review — the schedule is complete enough for the designated company reviewer.
- Ready to submit — every applicable readiness-gate item is complete and release is authorized.
- Submitted — the exact recorded version has been delivered.
- Auditor follow-up — the external firm has requested clarification or additional support.
- Pending third party — completion depends on a bank, attorney, vendor, specialist, or other outside party.
- Superseded — a newer controlled version has replaced the file.
- Closed — the external firm’s workflow indicates that no further action remains.
A submitted item remains active while questions, added support, or revisions are open. Link each follow-up to the delivered version and move the request to Closed when the external firm’s process indicates that work on the item is complete.
Connect every file to its request and submitted version
A consistent filename makes the request, entity, period, content, version, and preparation date visible:
[Request ID]_[Entity]_[Period]_[Description]_[Version]_[Preparation date].[extension]
Example: PBC-014_OperatingCo_20X6_AR-Aging_v03_20X7-02-12.xlsx
Advance the version for each revised submission. Record what changed, who approved the revision, and which prior version it supersedes. Preserve the exact submitted version and its change record in controlled company files subject to applicable retention and disposition requirements. When one schedule supports several requests, keep one approved file and cross-reference it from each tracker row.
Apply a ready-to-submit gate before release
Move a request to Ready to submit after the applicable checks below are complete. When the external firm agrees to receive preliminary information, identify that status in the file and tracker and record the planned final delivery.
| Gate | Management readiness condition | Disposition if open |
|---|---|---|
| Correct request, entity, and period | The tracker and file match the request ID and wording, legal entity, consolidation level, reporting period, currency, and units. | Correct the scope or ask the external firm to clarify the request before release. |
| Source agreement or documented reconciliation | The schedule agrees to its controlled source, or a documented reconciliation explains each difference. | Assign every reconciling item, quantify it, and keep the request in preparation or internal review. |
| Assumptions, exceptions, and preliminary status | Assumptions, estimates, exceptions, and preliminary figures are identified in the schedule and tracker. | Name the issue, owner, expected resolution, and agreed delivery status. |
| Internal reviewer sign-off | The designated reviewer has checked scope, calculations, support, reconciliation, and release authority. | Return the item to the preparer with specific review points and a new internal due date. |
| Supported differences and adjustments | Each adjustment or difference has a stated source, purpose, and explanation. | Escalate the accounting issue and identify its effect on the schedule and milestone. |
| Filename, version, and prepared date | The filename and tracker show the same request ID, entity, period, content, version, and date prepared. | Rename the file, update the version record, and identify the copy it replaces. |
| Approved delivery method and access | The recipient, permissions, portal folder, and delivery method are authorized for the information involved. | Confirm the delivery instruction and access before making the file available. |
After delivery, record the exact filename, version, date, location, and submitter. A dependable month-end close and reconciliation process supplies much of this foundation. Recurring gaps may point to work within Client Accounting Services, while repeated evidence or approval problems may warrant a broader review of internal controls.
The AICPA’s currently effective auditing standards include AU-C 500–599 on audit evidence for nonissuer audits. These standards help explain why a clear source trail matters: each submission should show where the information came from and who reconciled and reviewed it. The external firm decides what evidence it needs and how it will evaluate it.
Manage questions and open items in the same record
Record each question beside the file it concerns: date received, exact wording, affected version, response owner, next action, and expected response date. Useful cause labels include unfinished accounting, missing company records, third-party dependency, management judgment or approval, a request needing clarification, and sensitive-information or access restrictions.
Ask for clarification when the available schedule may address only part of the request. Escalate any item that could affect an agreed milestone or depends on an unresolved accounting decision. Issue a new version when a response changes submitted numbers, preserve the prior version, and add a concise change note.
Management may provide account information and contact details requested by the external CPA firm. The firm determines the information to confirm, selects the confirming party, directs and sends requests and follow-ups, and provides for responses to be sent directly to it. The external firm also determines its other testing selections and follow-up procedures.
Protect sensitive information throughout preparation and delivery
Use the external firm’s approved portal or another authorized, appropriately protected transfer method for bank, payroll, tax, employee, owner, and contractual information. Verify recipients and permissions, limit access according to business need, and keep superseded files out of active shared areas while following applicable retention requirements. The tracker should record the approved location without reproducing sensitive data.
Raise legal, privacy, or contractual restrictions before release so management, counsel, and the external firm can agree on an appropriate method. The Federal Trade Commission’s business-security guidance also emphasizes limiting access and applying appropriate safeguards when sensitive information is stored or transmitted.
Use relative milestones from receipt through final review
- On receipt of the list: Preserve the current list, confirm operating rules, establish the tracker, and assign the coordinator and initial owners.
- During preparation: Assemble, reconcile, review, and version schedules; identify dependencies and unresolved accounting matters.
- At the agreed pre-fieldwork checkpoint: Review priority and pending items with the external firm; update owners, dates, access, and delivery expectations.
- During fieldwork: Log questions against exact submitted versions, control revisions, and review priority open items at the agreed cadence.
- At final open-item review: Reconcile the tracker to the portal, confirm remaining actions, apply the company’s retention and disposition requirements to submitted versions and correspondence, and assign post-engagement process improvements.
The external firm’s dates and priorities govern the schedule. Use these milestones to organize the company’s work around those dates.
Keep the three roles clear
- Management owns the company’s records, financial statements, controls, representations, judgments, decisions, and approval and release of information.
- An Audit Readiness adviser may perform agreed preparation, reconciliation, internal-consistency review, tracker administration, and coordination with management’s authorization. Management retains its responsibilities and release authority.
- The separate external CPA firm determines its audit procedures; selects items for testing or confirmation; controls confirmation requests and responses; evaluates the evidence; follows up as needed; reaches conclusions; and issues its report.
John W. Halloran CPA, P.C. can help management organize the tracker, prepare and reconcile agreed schedules, and coordinate open items through Audit Readiness. A useful first conversation covers the current request list, key dates, close status, problem schedules, delivery instructions, and available staff. The selected CPA firm conducts the external audit.
For a separate workflow built around bank requests, see our lender-ready financial reporting guide.
Frequently asked questions
What does PBC mean in an external audit?
PBC commonly means prepared by client. It refers to schedules, records, explanations, and other information management provides in response to a separate external CPA firm's requests. Terminology can vary by firm.
What should a PBC request tracker include?
Include the original request ID and wording, entity and period, priority, company owner, preparer, reviewer, due date, status, version, reconciliation reference, approved delivery location, follow-up questions, and the next action and owner.
What makes a PBC schedule ready to submit?
For management's internal release process, a schedule may be marked ready when it covers the correct entity and period, agrees to its source or includes a documented reconciliation, identifies assumptions and exceptions, has completed internal review, uses the controlled filename and version, and is approved for delivery through the authorized channel. That status does not determine whether the information is sufficient and appropriate audit evidence; the external CPA firm makes that evaluation.
Must every PBC item be complete before fieldwork begins?
The external firm's priorities and dates determine what needs to be ready. List each pending item with its current state, dependency, next action, and expected delivery date, and raise any item that could affect an agreed milestone as soon as it becomes visible.
Can an Audit Readiness adviser communicate with the external CPA firm?
Management may authorize an adviser to coordinate requests and explain schedules prepared with the company, if the external CPA firm accepts that arrangement. The engagement should define the adviser's coordination and communication role. Management approves releases and significant accounting judgments and remains responsible for the information. The adviser should not replace or restrict the external CPA firm's direct access to management and other personnel it considers necessary. The external firm controls its procedures, evaluates the evidence, reaches conclusions, and issues its report.