What Should Be on a Nonprofit Audit PBC List?

A Prepared by Client, or PBC, list identifies the schedules, documents, and information an audit team needs from the nonprofit to perform the audit.

The exact list varies by organization, but most nonprofit audits include requests related to cash, contributions, grants, payroll, expenses, debt, fixed assets, board minutes, legal matters, internal controls, and financial reporting.

A strong PBC package can make the audit more efficient, reduce follow-up questions, and help keep the engagement on schedule.

Cash and Bank Accounts

Common requests include:

  • bank reconciliations;

  • bank statements;

  • investment statements;

  • outstanding check listings;

  • restricted cash support; and

  • confirmation information for banks and financial institutions.

All cash accounts should reconcile to the general ledger before fieldwork begins.

Contributions and Grants

Nonprofit revenue is often one of the most important audit areas.

Auditors may request:

  • grant agreements;

  • contribution documentation;

  • donor restriction support;

  • pledge schedules;

  • grant receivable schedules;

  • reimbursement requests;

  • grant reports;

  • award letters; and

  • schedules showing amounts received, spent, and remaining.

The organization should also be prepared to explain whether revenue is conditional, restricted, or subject to other terms.

Federal Awards

If the organization receives federal funding, the audit team may request:

  • a listing of federal awards;

  • grant agreements;

  • assistance listing numbers;

  • pass-through entity information;

  • federal expenditures by program;

  • reimbursement documentation; and

  • the Schedule of Expenditures of Federal Awards, or SEFA, if applicable.

Federal funding should be identified early so the audit team can determine whether Single Audit requirements apply.

Accounts Receivable and Payable

Typical requests may include:

  • accounts receivable aging;

  • grants receivable schedules;

  • contribution receivable schedules;

  • accounts payable listings;

  • subsequent cash receipt support;

  • subsequent payment support; and

  • documentation for significant or unusual balances.

These schedules should reconcile directly to the general ledger.

Payroll and Employee Costs

Payroll is often a significant expense for nonprofit organizations.

Common PBC items include:

  • payroll registers;

  • year-end payroll reports;

  • Form W-2 and Form 941 reconciliations;

  • employee listings;

  • compensation information;

  • benefit plan information;

  • accrued payroll schedules; and

  • functional expense allocation methodologies.

Organizations with grant-funded payroll may also need to provide documentation supporting how employee costs are allocated to programs or awards.

Expenses and Accounts Payable

The audit team may request support for:

  • significant expenses;

  • vendor invoices;

  • credit card transactions;

  • expense reimbursements;

  • purchasing approvals;

  • accrued expenses; and

  • payments made after year-end.

Auditors may select individual transactions for testing, so supporting documentation should be easy to locate.

Fixed Assets

Common requests include:

  • fixed-asset listings;

  • current-year additions;

  • asset disposals;

  • depreciation schedules;

  • invoices for major purchases; and

  • capitalization policies.

The fixed-asset schedule should reconcile to the general ledger.

Debt and Leases

If the nonprofit has debt or lease obligations, expect requests for:

  • loan agreements;

  • lender statements;

  • debt schedules;

  • principal and interest activity;

  • covenant requirements;

  • lease agreements; and

  • lease accounting schedules.

Major new agreements should be provided early in the audit process.

Net Assets and Donor Restrictions

Auditors commonly request schedules supporting:

  • net assets with donor restrictions;

  • net assets without donor restrictions;

  • current-year restricted contributions;

  • releases from restriction; and

  • remaining restricted balances.

The organization should be able to connect each material restriction to supporting donor or grant documentation.

Board Minutes and Governance

Governance documents can contain information that affects the financial statements.

Common requests include:

  • board meeting minutes;

  • finance committee minutes;

  • audit committee minutes;

  • bylaws;

  • significant board resolutions;

  • conflict-of-interest policies; and

  • organizational charts.

Minutes should be current and approved when possible.

Legal and Contractual Matters

The audit team may request information related to:

  • pending litigation;

  • legal claims;

  • attorney relationships;

  • major contracts;

  • leases;

  • commitments;

  • contingencies; and

  • significant agreements entered into during the year.

The auditor may also request direct communication with the organization’s legal counsel when appropriate.

Internal Controls

For a financial statement audit, the auditor will need to understand relevant internal controls.

The PBC list may therefore include:

  • accounting policies;

  • purchasing procedures;

  • cash disbursement procedures;

  • payroll processes;

  • bank reconciliation procedures;

  • system access information;

  • segregation of duties;

  • approval workflows; and

  • fraud-risk considerations.

The goal is to understand how financial transactions are initiated, approved, recorded, and reviewed.

Financial Reporting

Common year-end financial reporting requests may include:

  • trial balance;

  • general ledger;

  • financial statements;

  • budget-to-actual reports;

  • prior-year financial statements;

  • prior audit or review reports;

  • Form 990;

  • account reconciliations; and

  • significant accounting estimates.

For a first-year audit, prior-year information is especially important because the auditor may need to perform procedures related to opening balances.

What Makes a Good PBC Submission?

A good PBC submission is not simply complete.

It should also be:

  • accurate;

  • reconciled;

  • clearly labeled;

  • easy to follow;

  • consistent with the general ledger; and

  • provided by the agreed deadline.

If a requested schedule does not reconcile to the books, it is usually better to resolve the difference before sending it to the auditor.

The Bottom Line

A nonprofit audit PBC list is the roadmap for the information the audit team needs to complete the engagement.

The strongest PBC packages usually include clean reconciliations, organized grant documentation, complete supporting schedules, current governance records, and clear ownership of each request.

Good preparation can reduce follow-up questions, shorten delays, and make the audit process easier for both the nonprofit and the audit team.

How Bilotta & Company Can Help

Bilotta & Company, CPAs, LLC provides financial statement audits, reviews, and Single Audits for nonprofit organizations.

We work with clients to establish clear request lists, realistic timelines, and organized audit preparation so expectations are understood before fieldwork begins.

Related Resource: How Should a Nonprofit Prepare for Its First Audit? →

Visit the Nonprofit Financial Resource Center →

This article is provided for general educational purposes and should not be considered accounting, tax, or legal advice for a specific organization.