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Audit Preparation Checklist Template

A tracker for every request on your auditor's list, sheets for tying each schedule to the trial balance, and a readiness memo for fieldwork.

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Pack of 7 files: 3 documents, 4 spreadsheets

Audit Preparation Checklist Template

PBC Response ProcedureDocument
Readiness MemoDocument
Management Representation NotesDocument
PBC TrackerSpreadsheet
Open ItemsSpreadsheet
Tie Out LogSpreadsheet
Lead Schedule IndexSpreadsheet

Audit Preparation Checklist Template

PBC Response Procedure

[Entity]: the gate every schedule passes

An item that supports a trial balance line is not ready to send until it agrees with that line.

Four statuses, and Tied cannot be skipped

Status	What is true
Open	The item has an owner and a date. Nothing else yet
Tied	The schedule agrees with the trial balance, or the difference is inside tolerance and has a named cause
Provided	Delivered under the auditor's own number, in the format asked for
Accepted	The auditor has said they have what they need

Open straight to Provided is not a permitted move. Items with nothing to tie to, meaning minutes, contracts and policies, skip Tied and are marked as having skipped it.

The tie

schedule total

−

trial balance balance

difference

Recorded even when it is zero, because a blank difference column is indistinguishable from an untested one. Tolerance is set per line against a stated basis before fieldwork, so the threshold cannot move later to admit a difference somebody would rather not resolve.

Two kinds of cause, and the split is the output

Kind	What it means	What happens
Schedule	The schedule was wrong	Fix it, re-run the tie, nothing leaves wrong
Ledger	The ledger was wrong	Proposed adjusting entry, sent with the schedule

Tolerance is not materiality. The auditor sets their own threshold and may ask about a difference this gate accepted. The named cause is the answer.

Page 1 of 1239 words

How to prepare for a financial statement audit

Preparing for a financial statement audit means closing your books, building a schedule that supports each balance and gathering the documents your auditor will ask for. Do it before fieldwork, the weeks when the auditors test your numbers. A good audit preparation checklist follows the auditor's own request list and gives every item one owner and a due date. It also checks each schedule against your trial balance before anything goes out.

Treat a request as done when its schedule agrees with your ledger, not when you send it. An auditor who finds the two disagree has to work out why before relying on either.

A tall stack of printed documents marked with pink, orange, yellow and green sticky tabs — Number every document the way your auditor does, so both sides can find it. Photo: Tanja Tepavac on Unsplash

Set the deadline and get the request list early

Start from the date someone needs your audited statements and work backward. A lender's deadline sits in the loan agreement, and an investor's in the investment documents. A public company must file its annual report on Form 10-K within 60, 75 or 90 days of its fiscal year end¹, depending on its size.

Nonprofits and governments that spend $1,000,000 or more in federal awards² in a fiscal year need a single audit, or in narrow cases a program-specific one. The reporting package is due within 30 days of receiving the auditor's report, or nine months after year end³, whichever is earlier.

In the engagement letter, management accepts responsibility for the financial statements and agrees to provide the additional information the auditor requests for the audit⁴. The request list, often called the PBC list (for "prepared by client"), is how those requests arrive.

Ask for it early, and begin with the requests that depend on other organizations. Your outside lawyers usually reply to the auditor directly, through a letter of inquiry that management prepares and the auditor sends⁴. Auditors often confirm cash and receivables directly with your banks and customers, so have current contacts ready.

Close the books before you build schedules

Every schedule you send has to agree with your trial balance, the list of every account and its year-end balance. So finish the close first: reconcile each balance sheet account, book accruals and known adjustments, then lock the period. A year-end close checklist keeps that work in order.

Note which version of the trial balance you are tying to. If a late entry changes it, re-tie every schedule it touches, so two versions never circulate. Auditors examine material journal entries made while preparing the statements⁴, so keep support for every manual entry.

In a first audit, or your first with a new firm, the auditor needs evidence about your opening balances. That includes whether last year's closing balances were carried forward correctly⁴. Have last year's reconciliations and inventory counts ready.

What goes on an audit preparation checklist

Load the auditor's list exactly as issued, and use their numbering in your tracker, file names and emails, so both sides can refer to any item by its number. Give each request one owner and an internal due date a few days before the auditor's, leaving time to fix a difference rather than send it.

What auditors usually ask for, by area

Area	What to have ready	Must agree with
Cash	Bank reconciliations and statements for every account	Cash
Receivables	Aging by customer, allowance support, customer contacts	Receivables, net
Inventory	Count results, costing and the slow-moving reserve	Inventory
Fixed assets	Rollforward of cost and depreciation, invoices for large additions	Property and equipment
Payables and accruals	Vendor aging, accrual detail, payments made after year end	Payables and accrued liabilities
Debt and leases	Agreements, amendments, covenant calculations, lease schedule	Debt and lease liabilities
Revenue	Revenue by customer and month, key contracts, deferred revenue	Revenue and deferred revenue
Equity and governance	Cap table, board minutes, related party list	Equity

Contracts, minutes and policies have no balance to agree with, so check them for completeness instead.

Your auditor has to understand your accounting policies and the reasons for any changes⁴, so bring your accounting policy manual up to date before fieldwork.

Tie every schedule to the trial balance

AICPA standards direct auditors to obtain evidence, as needed, about the accuracy and completeness of the information they use⁴, including reports run from your ledgers. A schedule that disagrees with your trial balance is an inconsistency they have to resolve, so find it first.

Set tolerances in advance
Before testing, write down the largest difference you'll accept per line, such as 0.5% of the balance with a $5,000 floor. That's an internal rule, not the auditor's materiality.
Record every difference
Subtract the trial balance from the schedule total and record the result, even when it is zero. A blank cell looks the same as an untested one.
Give each difference one cause
Name why it differs, such as an extract run before late postings, a manual entry missing from the subledger or a formula error. Split a difference with two causes into two.
Fix the schedule or propose an entry
If the schedule was wrong, fix it and tie again. If the ledger was wrong, write a proposed adjusting entry with its effect on pre-tax income.

ExampleA receivables schedule, tied to the trial balanceAn illustrative example written for this guide. The amounts are made up.

Receivables aging, total: $6,184,220
Less the allowance for doubtful accounts, booked only in the general ledger: ($214,600)
Less credit memos posted December 30 and 31, after the aging was run: ($38,150)
Less customer payments received but not yet applied to invoices: ($23,000)
Equals receivables, net, on the trial balance: $5,908,470. Difference: $0

Three causes, not one gap. The $275,750 gap breaks into three ordinary items, each with its own cause.
The ledger was right. All three were schedule problems, so no adjusting entry was needed.

Find your own adjustments before the auditor does

Auditors accumulate the misstatements they find⁴, other than clearly trivial ones, and ask management to correct them. Any left uncorrected are summarized in, or attached to, the representation letter you sign at the end.

Who finds an error matters. AICPA standards list an auditor finding a material misstatement your own controls would have missed⁴ as an indicator of a material weakness. Auditors are required to report material weaknesses in writing to those charged with governance, usually your board.

So send the ledger errors your tie-out found as proposed entries, with their effect on pre-tax income, alongside the schedules they belong to. A short memo before fieldwork, covering what tied, what you will adjust and what is still open, helps the auditors plan.

Answer fast during fieldwork, then sign off

During fieldwork, answer each question within a business day, even if the answer is only a date. When an item comes back, log the auditor's reason in their words, fix the cause and say what changed when you resend it. At the end, read the reasons together to decide what to fix before next year.

The audit ends with your representation letter, dated as of the auditor's report⁴. In it, management confirms points such as giving the auditor all relevant information and recording every transaction. If management refuses those core statements, the auditor must disclaim an opinion or withdraw.

When to bring in your CPA

This guide follows the AICPA standards used for audits of US private companies and nonprofits. Public companies are audited under PCAOB standards instead. It isn't accounting or audit advice. Tell your auditor early about anything unusual, such as an acquisition or a covenant breach, and ask your own CPA how to account for it.

Before fieldwork starts

The trial balance is locked and its version noted
Every schedule agrees with it, or each difference has a cause
Each request has one owner and an internal due date
Legal letter drafts and bank and customer contacts are with the auditor
Minutes are approved for every board meeting in the year
Proposed adjustments are listed with their pre-tax effect

To start from the auditor's list rather than a blank tracker, open the template on this page in River. It loads every request under the auditor's numbering and marks which ones must agree with your trial balance.

How to use this template

Use the files as they are, or open them in River. The sheets come filled in with a made-up example audit, so you can see a finished tracker first. With Edit with AI, send River the auditor's request list in any form, plus your trial balance. River sets up the tracker under the auditor's numbering and reports how many requests must tie to a balance. Then it asks the one question that unblocks the next step, such as whether your trial balance is final.

Download it or open it in River
Download the three Word documents and four CSV sheets with no signup, or open them in River with Edit with AI.
Load the request list
Enter every request under the auditor's number, with one owner, an internal due date and whether it must tie.
Tie out before you send
Agree each schedule to the trial balance and give every difference a cause, yourself or by asking River to run the tie-out.
Send, chase and log returns
Send items under the auditor's numbers, chase open items owner by owner, and log every return in the auditor's words.

What's in the template

#	Cause	Kind	Items
1	Subledger extract taken before late postings	Schedule	3
2	Manual journal not in the subledger	Schedule	3
3	Reclassification between accounts	Schedule	2
4	Adjusting entry not yet posted	Ledger	5
5	Extract filter wrong: dates, entity or status	Schedule	2
6	Schedule arithmetic error	Schedule	3
7	Account mapped to the wrong statement line	Schedule	1
8	Genuine ledger error	Ledger	1

Item	Trial balance line	Difference	Tolerance	Over	Cause
A-03	Operating cash	14,260	12,022	yes	1
B-01	Accounts receivable, net	275,750	29,542	yes	2
B-04	Allowance for doubtful accounts	16,200	5,000	yes	4
C-02	Inventory	233,360	38,045	yes	2
C-05	Inventory reserve	(27,500)	5,000	yes	4
C-08	Work in process	6,120	5,994	yes	6
D-01	Prepaid expenses	31,840	5,000	yes	1
D-03	Other current assets	(9,600)	5,000	yes	7
E-01	Property, plant and equipment	214,800	92,136	yes	5
E-04	Accumulated depreciation	(48,220)	46,834	yes	2
E-07	Construction in progress	386,500	5,379	yes	3
F-01	Accounts payable	(62,140)	21,406	yes	1
F-05	Accrued purchases	18,450	5,000	yes	4
G-02	Accrued compensation	74,600	5,000	yes	4
G-06	Accrued warranty	42,800	5,000	yes	8
H-03	Operating lease liability	118,900	15,338	yes	6
I-02	Additional paid in capital	3,200	62,384	no	6
J-01	Net revenue	186,200	240,151	no	3
J-06	Deferred revenue	26,400	5,000	yes	4
K-02	Payroll expense	11,700	45,864	no	5
20	Gross absolute difference	1,808,540		17 over	6 ledger

Component	Amount	Running	Cause
AR aging total, subledger	6,184,220	6,184,220	Start
Allowance for doubtful accounts, booked at the GL only	(214,600)	5,969,620	2
Credit memos issued 30 and 31 Dec, not applied in the aging	(38,150)	5,931,470	1
Unapplied cash receipts held in suspense	(23,000)	5,908,470	3
Trial balance, accounts receivable net	5,908,470	0	Tied

Component	Amount	Running	Cause
Perpetual inventory, subledger	7,842,300	7,842,300	Start
Obsolescence reserve booked at the GL only	(186,000)	7,656,300	2
December standard cost revaluation, manual journal	(88,560)	7,567,740	2
Goods in transit FOB shipping point, received in January	41,200	7,608,940	1
Trial balance, inventory	7,608,940	0	Tied

Item	Proposed entry	Pre-tax
B-04	Allowance understated against the aged balances	(16,200)
C-05	Inventory reserve overstated on slow moving valve bodies	27,500
F-05	Accrued purchases understated, two receipts not accrued	(18,450)
G-02	Accrued compensation understated, Q4 bonus at the revised rate	(74,600)
G-06	Warranty accrual understated against the claims history	(42,800)
J-06	Deferred revenue understated, one installation not yet accepted	(26,400)
	Net effect on pre-tax income	(150,950)

	Items	Came back	Return rate	Accepted first pass
FY2025	152	38	25.0%	75.0%
FY2026	148	9	6.1%	93.9%

Stated reason	Count	Share
Schedule did not agree to the trial balance	21	55.3%
Wrong period or entity in the extract	7	18.4%
Item incomplete, a component missing	6	15.8%
Format the auditor could not use	4	10.5%

PBC Response ProcedureHow a request moves from open to accepted: the tolerance table, eight causes, owners, returns and escalation triggers.
Readiness MemoWhat you send the engagement team before fieldwork: what tied, proposed adjustments, accepted differences and open items.
Management Representation NotesEach statement you'll likely be asked to sign, who can affirm it, its evidence and whether it's ready.
PBC Tracker sheetEvery request under the auditor's number, with owner, schedule total, trial balance, difference, cause, status and returns.
Open Items sheetWhat is still outstanding, whether you or a third party is holding it up, and the last action taken.
Tie Out Log sheetEach difference broken into its parts, with an amount, a cause and a running balance to the trial balance.
Lead Schedule Index sheetOne row per trial balance line: balance, tolerance and its basis, owner, requests that tie to it and differences found.

Common questions

What is a PBC list in an audit?

A PBC list, short for "prepared by client," is your auditor's list of the schedules, reports and documents your team must provide. It may arrive as a spreadsheet, a PDF or requests in the firm's online portal, with items numbered by area, such as cash or receivables. Keep those numbers on everything you send back, and give each item one owner.

When should you start preparing for a year-end audit?

Start when you sign the engagement letter, before year end if you can. Ask for the request list early and begin anything that depends on outsiders, such as legal letters, because those replies arrive on someone else's schedule. Finish the year-end close before building schedules, since each one has to agree with the final trial balance.

What is a management representation letter?

It is a letter from management to the auditor, dated as of the auditor's report date. It confirms, among other things, that management gave the auditor all relevant information and recorded every transaction, and it summarizes misstatements left uncorrected. Auditors are required to request it, and if management refuses the core statements, the auditor cannot give an opinion.

Is my internal tolerance the same as the auditor's materiality?

No. Your tolerance is an internal rule for deciding which differences to resolve before a schedule goes out. Your auditor sets materiality by their own professional judgment, can work to lower thresholds, and may ask about any difference you accepted. Give every difference a named cause, even a small one, so the answer is ready.

Is this audit preparation checklist template free?

Yes. Download the three Word documents and four CSV sheets with no signup. The sheets come filled in with a made-up example audit, so you can see how a finished tracker and tie-out log look before you clear them. Edit with AI opens the same template in River.

What does Edit with AI do?

It opens the template in a free River workspace and asks for the auditor's request list, in whatever form it arrived, plus your trial balance. River loads every request under the auditor's own numbering and works out which ones must agree with a trial balance line. It sets a starting tolerance you can change and flags requests with no clear owner.

Sources

U.S. Securities and Exchange Commission. “Form 10-K.” sec.gov (opens in a new tab)
Cornell Law School. “2 CFR § 200.501 — Audit requirements.” law.cornell.edu (opens in a new tab)
Cornell Law School. “2 CFR § 200.512 — Report submission.” law.cornell.edu (opens in a new tab)
AICPA & CIMA. “AICPA SASs - currently effective.” aicpa-cima.com (opens in a new tab)

Written by

Chandler Supple

Co-founder & CEO, River

Chandler has spent the last six years working in AI, building tools for millions of users and Fortune 100 companies. In 2025, he co-founded River to build a new kind of operating system for AI agents.

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Reviewed by

Brian Joseff, Co-founder, River

LinkedIn X

Audit Preparation Checklist Template

[Entity]: the gate every schedule passes

Four statuses, and Tied cannot be skipped

The tie

Two kinds of cause, and the split is the output

How to prepare for a financial statement audit

Set the deadline and get the request list early

Close the books before you build schedules

What goes on an audit preparation checklist

Tie every schedule to the trial balance

Find your own adjustments before the auditor does

Answer fast during fieldwork, then sign off

How to use this template

Download it or open it in River

Load the request list

Tie out before you send

Send, chase and log returns

What's in the template

The closed list of eight

What the first internal pass found

Tie Out Log

Two reconciliations in full

B-01 Accounts receivable, net

C-02 Inventory

What the ledger causes became

What that does to the year

Returns, either side of the gate

The 38 FY2025 returns, in the auditor's own words

Common questions

Sources

Chandler Supple

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