The PBC checklist for a first SaaS audit
A first audit rarely fails on the accounting. It fails on the scramble. This is what the auditor will ask you to produce, grouped the way the work actually breaks down, and ordered by what to start first.
A clean first audit has become table stakes. An institutional round, a bank facility, or an enterprise customer running vendor diligence will all eventually ask for audited financials. The audit itself is rarely where it goes wrong. It goes wrong in the weeks of scrambling to produce support that should have existed all along.
The short version
- A first audit rarely fails on the accounting. It fails on the scramble for support.
- The PBC list reduces to six groups. Build your tracker before the auditor sends theirs.
- Start with revenue, the rollforwards, and the cap table. They cannot be reconstructed fast.
- Treat it as a documentation project months ahead, not a fire drill during fieldwork.
That support has a name. The auditor sends a PBC list, for "prepared by client," early in the engagement. It is the full set of schedules, documents, and reconciliations they expect you to hand over. It is long, and it arrives before fieldwork. The companies that have a smooth first audit are the ones that treated the PBC list as a project months ahead, not a fire drill during.
The single best predictor of a smooth first audit is whether the revenue memo exists before fieldwork, not after.
What the list actually asks for
Every auditor formats theirs differently, but a first SaaS audit reduces to six groups.
Revenue and deferred revenue
- Signed contracts and order forms for every deal in the auditor's sample
- Your revenue recognition policy memo, written to ASC 606
- Revenue by customer, reconciled to the general ledger
- A deferred revenue rollforward that ties to billings and recognized revenue
- A deferred commissions schedule under ASC 340-40
Cash and receivables
- Bank statements and reconciliations for every account, every month
- Accounts receivable aging tied to the GL
- Allowance for doubtful accounts and the analysis behind it
Equity and cap table
- A cap table reconciled to the equity balances in the GL
- Stock compensation expense schedule under ASC 718
- Your most recent 409A valuation and board approvals for grants
- SAFE, convertible note, and preferred share agreements
Expenses, payroll, and accruals
- Payroll registers and a reconciliation to the GL
- Support for material accruals and the methodology behind them
- Accounts payable aging and a search for unrecorded liabilities
- Prepaid expense schedule
Capitalized costs and commitments
- Fixed asset rollforward with additions and depreciation
- Capitalized software support under ASC 350-40, if you capitalize
- Lease schedules under ASC 842, including embedded leases in hosting
- Debt agreements and covenant calculations
Entity and governance
- Organizational chart and legal entity structure
- Board minutes for the period under audit
- Related-party transactions and agreements
- A written summary of significant accounting policies
Three items cannot be reconstructed quickly and decide your timeline: the revenue file (contracts plus the ASC 606 memo), the deferred revenue and commissions rollforwards, and the cap table tied to stock comp. Bank recs and AP aging are mechanical. The judgment-heavy schedules are where the weeks go, so begin there.
Judgment-heavy schedules take weeks to prepare and cannot be reconstructed under deadline; mechanical ones take days. Begin with revenue, the rollforwards, and the cap table. Illustrative.
How to use it
Build a tracker from the six groups above before the auditor sends theirs. Assign one owner per item. Produce each schedule once, so it ties to the GL and you are not rebuilding it under deadline. Treat the first audit as a documentation exercise as much as an accounting one, because that is what most of it is.
Done early, the PBC list is a checklist. Done late, it is the reason a first audit slips a quarter and your raise slips with it.
Facing a first audit?
A working session maps how far off you are and the order to close the gap, before the auditor's list lands. A sample of the work, not a sales call.
Request a consultation →