Audited Financial Statements Prepared by Client (PBC)

The reason clients want Audited financialinventory is on site, they should have the
statements is to provide credibility for theirpersonnel who performed the original inventory
business. Only a certified public accountant (CPA)count accompany the accountant on their test
can perform the audit, but there are steps thatcounts since they are most familiar with the
the client can perform to reduce the cost of andlayout and locations of inventory.
time necessary for the audit to be completed.The accountant needs to inquire with the client's
The accountant performing the audit will requestslawyers and document any active or pending
financial reports from the company to review.litigation, claims, or assessments. The client should
These reports include the income statement,collect all documentation related to any litigation,
balance sheet, and statement of cash flow alongclaims, and assessments and provide their
with financial documentation to support theselawyers contact information.
reports. If the client has the required financialThe accounting estimates made by management
documents and reports prepared and available forwill need to be evaluated by the CPA. The client
the accountant to review, this will save time andshould provide documentation for the estimates,
money, preventing the CPA from needingfactors and assumptions which affect the
together this information themselves.estimates, procedures used to prepare estimates
The accounts receivable will need to be confirmed.in the financial statement presentation, and
Having a prepared accounts receivable detailcomparisons of past estimates and actual results
schedule which ties into the general ledger balanceto support the reasonableness of their current
will make it easier for the accountant to confirmestimates.
the accounts receivable. In addition the clientLastly the accountant needs to assess the degree
should prepare a list of names and addresses ofof risk that fraud will cause a misstatement in the
all customers and outside entities to give to thefinancial statements, document any fraud risk
accountant for confirming receivables, businessfactors, and detail the client's response to these
activities, and account balances.risk factors. The client should provide
The accountant will need to observe thedocumentation of any fraud that has occurred,
inventory count. The client should have the nameshow they have identified any fraud risk factors,
and addresses of public warehouses where theirand any anti-fraud programs that have been put
inventory is stored readily available. If theinto place.