Practice Management

The “PBCs” of Pain-Free Audits

Written by Sara Laidlaw

As a contracted controller, I see the best and worst of financial audits. I’m here to tell you that your auditors should be considered trusted business partners, not demons from below!

Your annual financial audit can be an uphill drudgery or a coasting sail.

Sara Laidlaw will present the session, Using Technology for Audit Prep and Collaboration, at Accountex USA 2017.

Why Do Audits Feel So Painful?

In my many years of nonprofit audit prep experience, I have found that the main pain challenge is a lack of organization and communication between the client’s audit team and the auditors. Being unprepared and unorganized increases the cost and length of your audit, not to mention loss of sleep.

CPA firms have access to more tools than ever to collaborate with clients, but in my experience, most have not implemented any technology outside of Excel. Even if the CPA firm has impemented a checklist management tool, some clients want to stick with Excel.

The auditor’s PBC (Provided by Client) request list is intended to help you prepare.

I have seen PBC requests in many flavors — phone calls, faxed lists, emails, PDFs, Word docs, and Excel. Short-lists and long-lists. Some shared in DropBox or in some other online solution. The good news is that online project management tools with collaborative features are finally starting to pick up steam, and some are specifically targeting the accounting industry.

I am passionate about keeping ahead of the curve. As a controller, I must be proactive when it comes to my audit preps. I know that firms and organizations using collaborative tools report a 20% to 50% reduction in time spent on document exchange.

If your auditor is not on board yet, you can do what I did and implement a system yourself!

What we want to avoid is inefficiency:

  • Unfocused Effort
    • Poor timing and prioritization
    • Duplicated work
    • Providing unnecessary reports or information
    • Unclear expectations from both parties
    • Ignored requests
    • Poor document management
  • Lack of Communication
    • Lists of requests in emails to multiple people, which are impossible to track
    • Who is to answer what? Maybe the other guy will answer it!
    • Who’s got the ball?
    • Team unaware of what others are doing
    • Members answer in person yet do not to tell the others that it is off the 2Do list.
    • Where are the files? Who created them and whom should they ask to explain?

What Can Be Done to Make This Process Less Painful?

First, the week of the audit is NOT the time to start preparing. Smooth audits depend on the work done BEFORE the auditors walk through the door.

Second, I have found that the best solution for audit prep is to avoid emails and create an online and collaborative relationship between the client’s team and their auditors. Get the most out of your auditors’ expertise by allowing them to focus on data analysis — not on struggling with supporting documents and answers.

Collaborate the entire audit process in ONE single client- and auditor-friendly environment.

While CPA firms may utilize audit-specific software, there are other list/collaborative products that may work fine, especially when created by the client.

Begin with the PBC request list and find a method to exchange not only documents but also questions and answers. I look for solutions that enable me to be creative in the setup. I am a very visual person. I like conditional features such as bolding and changing colors as information changes. When planning the solution, look for customizable notifications. Who is to have access? How often will they be notified? Based on what changes? Ensure that your solution is secure. All data must be encrypted in transit and at rest. What happens to the list and documents once the audit is complete?

Examples of information needed:

  • Item Title – Short Document name or Question
    • Elaborate in a comment thread
  • Comment thread per item
    • With username, date, and timestamp for audit trail
  • Ability to attach documents or enter an URL to the document’s location
    • With drag and drop
  • Who has the ball?
    • Assigned to Auditor name
    • Assigned to Employee name
    • With Drop down lists of names
  • Requested date
  • Status
    • Fulfilled, Done, Whew
    • Workin on it, In Progress, It’s coming!
    • Waiting on Sara
    • Waiting on Mng
    • Pending Answer
    • Answered verbally
  • G/L Acct number
  • Reference
    • General / Planning
    • Cash
    • Fixed Assets
    • A/R and Revenue
    • A/P and Expenses
    • Net Assets

 Next Year…

The best part of developing a collaborative PBC list is that questions and issues can be rolled over to next year’s list, enabling a more proactive process. Cull unneeded items from the list. Make notes on pain points and items/processes that can be improved next year.

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About the author

Sara Laidlaw

Sara Laidlaw, owner of Accounting Services Bureau Inc., specializes in nonprofits and is the developer of TBX Trial Balance Exporter. By the mid 1980s, she was an accountant by day and restoring exotic cars by night. When informed that Price Waterhouse was closing her write-up department, she bought it. When challenged by a shipping company to find a program for International Longshoremen's Association (ILA) payroll, she wrote one and started a payroll company. Somewhere in her accounting journey, Sara became known as the local nonprofit guru, leading to nonprofits becoming 90% of her client base. With remote access, her clients are all over the US. When told that QuickBooks doesn’t export a trial balance by class or period, she wrote a utility that does just that. Lesson? Just don’t tell her that she “can’t” and get used to hearing “why not?” Sara’s purpose and passion lies in helping clients improve business processes in the most efficient and painless manner. She’s valued for her no-nonsense, down to earth approach to solving problems.


  • Hi Sara

    Great article. Could I also suggest using software to manage the PBC list that allows collaboration. This could be as simple as a shared Google Doc, or more advanced like our software which automatically chases the client and helps them supply the documents through the software.

    • Hi James,

      That is exactly what I was suggesting and will be demoing various programs available today during my “Using Tech for Audit Prep and Collaboration” session during Accountex 2017 in Boston in September. I will take a peek at your solution.

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