Preparing for your statutory audit

A statutory audit goes more smoothly when the records are ready before the auditors arrive. Good preparation saves time for your team and for ours. It also means fewer follow-up questions later.

This article explains what we ask for, why we ask for it and how the process usually runs.

What a PBC list is

PBC stands for "prepared by client". A PBC list is the list of schedules, reports and documents we ask you to prepare before fieldwork starts. It is agreed at the planning stage and tailored to your organisation.

A typical PBC list includes:

• the trial balance at year end, and the prior year comparatives
• bank statements and bank reconciliations for the year end month
• a fixed asset register, with additions and disposals for the year
• debtors and creditors age analyses, reconciled to the ledger
• stock or inventory count sheets, where relevant
• payroll reports and PAYE reconciliations
• VAT returns, and reconciliations to the sales and purchases ledgers
• loan agreements, leases and other significant contracts
• minutes of board and shareholder meetings
• the draft annual financial statements (AFS), if you prepare them yourselves

Each item has an owner on your side and a target date. If an item does not apply, say so. A short note saves a long email chain.

Records to keep through the year

Audit preparation starts long before year end. The following habits help:

• Reconcile bank accounts every month and keep the reconciliations.
• File supplier invoices and receipts so that each payment can be traced.
• Keep signed contracts and approvals in one place.
• Record board decisions in minutes, and sign them.
• Keep payroll records, including starters, leavers and changes in pay.
• If you are VAT registered, keep your Lekuka records and reconcile them to your books each month.

Records do not have to be on paper. Clear, well-named electronic files are often easier to work with.

How the timeline works

Every audit is different, but most follow the same broad stages.

1. Engagement. We agree the scope, responsibilities and fees in an engagement letter.
2. Planning. We meet, discuss changes in the business and agree the PBC list and dates.
3. Preparation. Your team prepares the PBC items and closes the books.
4. Fieldwork. We test balances and transactions, and raise questions as we go.
5. Completion. We review the findings, discuss any adjustments and finalise the AFS.
6. Reporting. We issue the audit report and, where useful, a management letter with points for improvement.

Any filing or meeting deadlines that apply to your organisation will be confirmed with you at planning. We work back from those dates so that there is time for review.

Using the client portal for document requests

Our client portal keeps requests and documents in one secure place, instead of spread across email.

• Each PBC item appears as a document request, with a description and a due date.
• You upload files directly against the request.
• You can add a short note, for example to explain a difference or to say an item does not apply.
• You can see which requests are open, submitted or accepted.
• Questions raised during fieldwork come through the same place, so the trail is complete.

A few tips: name files clearly, upload one item per request where you can, and avoid sending the same document by email as well. If you are not sure what a request means, ask through the portal and we will explain.

On the day

Make sure someone who knows the books is available during fieldwork. Quick answers keep the audit moving. If a key person will be away, tell us early so that we can plan around it.

After the audit

Read the management letter and agree who will act on each point. Many of the points are simple process changes that make next year easier.

This article is general information, not professional advice. Please speak to us about the requirements that apply to your organisation.