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Nonprofit Audit Checklist: Preparing the PBC List and Schedules for Your Annual Audit

Sherman Hsieh
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Nonprofit Audit Checklist: Preparing the PBC List and Schedules for Your Annual Audit

Last updated: October 9, 2026 · Independent guide · We do not sell rankings or coverage.

A nonprofit audit checklist is the prepared-by-client (PBC) list your finance team works through before fieldwork: the trial balance, reconciliations, roll-forwards and supporting schedules your auditor will test, organized by balance sheet and income statement area. The list below covers cash, contributions and pledges, grants and restrictions, functional expenses, fixed assets, payroll and, if you spend $1,000,000 or more in federal awards, the Single Audit items. Each row names the report you would pull from fund accounting software to produce it.

How to use this template

Copy the table into a spreadsheet or into your auditor’s request portal and add two columns of your own: an owner and a due date. Your auditor will send its own request list, so match their item numbers to these rows rather than running two lists. Tie every schedule to the final trial balance before you upload it, and replace it if a balance changes.

The nonprofit audit PBC checklist

Table 1: Prepared-by-client checklist by audit area. Section 9 applies only if your federal expenditures reach the Single Audit threshold in 2 CFR 200.501.

Item to provide What it must show Report or source to pull Ties to
1. General and governance
Final year-end trial balance All accounts by fund or restriction class, after your own adjustments Trial balance by fund (or by restriction dimension) Every schedule below
General ledger detail Every posting for the year, with source and user General ledger or transaction detail export (Excel) Trial balance
Manual journal entry listing Entries made outside subledgers, with preparer and approver Journal entry report filtered to manual entries General ledger
Board minutes, policies, contracts and leases Approvals, new agreements, designations, related-party matters Board portal or shared drive Notes and disclosures
Prior-year Form 990 and IRS determination letter Filed return and exempt status Tax file Current-year 990 reconciliation
2. Cash and investments
Bank reconciliations, all accounts, at year end Bank balance, outstanding items, adjusted book balance, preparer and reviewer sign-off Bank reconciliation report plus bank statement Cash accounts on trial balance
Next month’s bank statements Clearing of year-end outstanding checks and deposits Bank portal Reconciling items
Investment statements and roll-forward Beginning value, contributions, withdrawals, realized and unrealized gains, fees, ending value Custodian statements; investment income accounts Investment return on statement of activities
3. Contributions and pledges
Contribution revenue reconciliation Donor system gift totals agreed to ledger revenue, by restriction Donor CRM gift summary; revenue accounts by fund Contribution revenue
Pledges receivable roll-forward Beginning balance, new pledges, payments, write-offs, ending balance Pledge aging or open pledge report from the CRM Pledges receivable
Pledge discount and allowance calculation Payment schedule by year, discount rate, allowance method Workpaper built from the pledge schedule Net pledges receivable
Large gift files Gift agreements and restriction letters above the auditor’s sample threshold Donor file Restriction coding
In-kind contributions schedule Description, valuation basis, program used in In-kind revenue account detail Contributed nonfinancial assets line
4. Grants and restrictions
Grant listing Each award: funder, amount, period, conditional or unconditional, contribution or exchange Grant or project list from the grants module Grant revenue, receivables, refundable advances
Grant receivables and deferred revenue schedule Billed, unbilled, received in advance, by award Grant budget-to-actual by project Grants receivable, refundable advances
Net assets with donor restrictions roll-forward Beginning balance by purpose or time restriction, new gifts, investment return, releases, ending balance Net assets by restriction report or fund balance report Statement of financial position by class
Releases from restriction support Expenses or passage of time that satisfied each restriction Release journal entries with fund detail Release line on statement of activities
Board-designated funds listing Board resolution and balance for each designation Minutes; designation accounts Net assets without donor restrictions
5. Functional expenses
Expenses by nature and function Each natural expense line split across programs, management and general, and fundraising Statement of functional expenses or expense report by function dimension Total expenses
Allocation methodology and calculations Bases used (time, square footage, headcount) and the source data Timesheets, floor plan, allocation journal entries Shared cost lines
6. Fixed assets
Fixed asset roll-forward By asset class: beginning cost, additions, disposals, ending cost, and the same for accumulated depreciation Fixed asset register or depreciation roll-forward report Property and equipment, depreciation expense
Additions and disposals support Invoices for additions over your capitalization policy; disposal proceeds; current policy and useful lives Asset additions report; AP invoices Roll-forward
7. Payroll and benefits
Annual payroll register Gross pay, withholdings and employer taxes by employee Payroll provider annual register Salary and payroll tax expense
Payroll tax filings reconciliation Four quarterly Forms 941 and the W-3 agreed to the register and the ledger Payroll provider tax filings Payroll tax expense and liabilities
Accrued payroll and paid time off Wages earned but unpaid at year end; vacation balances and rates PTO balance report; first post-year-end payroll Accrued liabilities
8. Payables and other liabilities
Accounts payable aging and accruals Open invoices at year end and expenses incurred but not yet invoiced AP aging report; accrual journal entries Accounts payable, accrued expenses
Subsequent disbursements listing Payments made in the 60 to 90 days after year end Check or payment register for the period Unrecorded liabilities test
Debt and lease schedules Balances, payments, interest, maturities; lease terms Loan statements; lease schedule Notes payable, lease liabilities
9. Single Audit items
Schedule of expenditures of federal awards (SEFA) Expenditures by program and Assistance Listing number, pass-through names and numbers, amounts to subrecipients, notes Expense report by grant, filtered to federal awards Federal grant expense in the ledger
Award documents for each federal program Notices of award, amendments, pass-through agreements, federal reports filed Grant file SEFA and compliance testing
Drawdown and reimbursement requests Every request filed, amounts and dates Grant billing history; federal payment system exports Grants receivable, cash management testing
Procurement files and vendor listing Bids or quotes, and suspension and debarment checks for federally funded purchases Purchase order report by grant Procurement compliance
Time and effort documentation Records showing how pay charged to each award reflects actual work Timesheets with grant coding; payroll allocation report Federal salary charges
Subrecipient listing and monitoring files Subawards, risk assessments, monitoring results Subaward register SEFA subrecipient column
Equipment inventory for federally funded assets Property records and the latest physical inventory reconciliation Fixed asset register filtered by funding source Equipment compliance
Summary schedule of prior audit findings and corrective action plan Status of each prior finding; plan for each current finding Prepared by management Reporting package

Walking through each part of the checklist

General and governance

Send the trial balance first, run by fund or restriction class, because your auditor needs to see net assets with and without donor restrictions separately. Auditors read minutes for debt, leases, designations and related-party matters. If you file Form 990 Schedule D, Parts XI and XII ask you to reconcile revenue and expenses on your audited statements to the return, so keep a list of reconciling items as you close (IRS Instructions for Schedule D, April 30, 2026).

Cash and investments

Each bank reconciliation should show who prepared it, who reviewed it and when. For investments, the roll-forward lets the auditor agree your net investment return to custodian statements. ASU 2016-14 requires investment return to be reported net of external and direct internal investment expenses, so the fee line belongs inside the roll-forward rather than in operating expenses (FASB ASU 2016-14, August 2016).

Contributions and pledges

Reconcile donor database gift totals to the ledger by restriction and list the differences, such as gifts entered after the cutoff. For pledges, James Moore & Co. notes that unconditional pledges are generally recognized when received and that pledges payable over multiple years need to be discounted to present value, with an allowance for amounts you may not collect (James Moore & Co., August 19, 2026). Our guide to pledge management software covers how CRMs and ledgers keep that schedule in step.

Grants and restrictions

Classify every grant on the listing before fieldwork. Under ASU 2018-08, a grant is a contribution or an exchange, and a contribution is conditional only when the agreement has both a barrier and a right of return or release (FASB ASU 2018-08, June 2018). Conditional awards are not revenue until the barrier is met, so cash received in advance sits as a refundable advance. Build the restricted net assets roll-forward by purpose, and agree total releases to the release line on your statement of activities. Our statement of activities template and our restricted funds accounting guide show the journal entries behind that line.

Functional expenses

ASU 2016-14 requires every nonprofit to present an analysis of expenses by both nature and function, in one location (FASB ASU 2016-14). Auditors will test the allocation of shared costs such as rent, IT and the executive director’s salary. Give them the method and the data: timesheets for salaries, square footage for occupancy.

Fixed assets

The roll-forward should run by asset class, with cost and accumulated depreciation in separate sections. Ending balances must equal the trial balance. If you hold equipment bought with federal funds, 2 CFR 200.313(d) requires property records that include the funding source and the federal share, plus a physical inventory reconciled to those records at least once every two years (eCFR, 2 CFR 200.313, current as of October 7, 2026). The 2024 revisions raised the federal equipment threshold from $5,000 to $10,000 (CBIZ, July 31, 2026).

Payroll and benefits

Agree the annual payroll register to salary expense, and agree the four quarterly Forms 941 to the register and to the year-end W-3. For employees charged to federal awards, 2 CFR 200.430(g) requires records that accurately reflect the work performed, cover the employee’s total activity, and are not based on budget estimates alone without after-the-fact review (eCFR, 2 CFR 200.430, current as of October 7, 2026).

Payables and other liabilities

Auditors search for unrecorded liabilities by reviewing payments made after year end. Pull the payment register for the period they request and mark which items you accrued.

Single Audit items

A non-federal entity that expends $1,000,000 or more in federal awards during its fiscal year must have a single or program-specific audit (eCFR, 2 CFR 200 Subpart F, current as of October 6, 2026). CBIZ notes the threshold rose from $750,000 for fiscal years beginning on or after October 1, 2024 (CBIZ, July 31, 2026). Under 2 CFR 200.508 the auditee, not the auditor, prepares the financial statements and the SEFA, and 200.510(b) lists what the SEFA must contain. Our guide to the schedule of expenditures of federal awards walks through building it from the ledger. The SEFA notes must also say whether you used the de minimis indirect cost rate.

Under 200.511, you also prepare the summary schedule of prior audit findings and a corrective action plan naming a contact person, the planned action and a completion date for each finding. The reporting package and data collection form go to the Federal Audit Clearinghouse within 30 calendar days of receiving the auditor’s report or nine months after year end, whichever is earlier (2 CFR 200.512). For years ending after June 30, 2026, Schneider Downs reported in August that OMB had not yet issued the 2026 Compliance Supplement and that auditors cannot issue final Single Audit reports until it is released (Schneider Downs, August 18, 2026).

Common mistakes

  • Schedules that do not tie. A roll-forward that is $400 off the trial balance will come back to you. Add a tie-out check row to every schedule before upload.
  • Sending the CRM total as contribution revenue. Donor systems count soft credits, pledges and gifts after cutoff differently from the ledger. Reconcile the two and explain the differences.
  • Restricted gifts coded to the wrong class. A missing restriction code puts revenue in net assets without donor restrictions and breaks the roll-forward. Review new gifts above a set amount each month.
  • Releases posted to one side only. A release must reduce the restricted class and increase the unrestricted class in the same entry.
  • Allocation percentages with no support. Keep the time study or square footage calculation with the allocation entry.
  • SEFA built from budgets or cash draws. The SEFA reports expenditures, so build it from expense by award and reconcile it to the ledger.
  • Ignoring last year’s management letter. Auditors start with prior comments. Document what you changed.

When to move from a spreadsheet to software

A spreadsheet checklist fed by trial balance exports works for a small organization with a handful of restricted gifts and no federal funding. Move more of the work into your accounting system when you rebuild the restriction roll-forward or functional expense grid by hand every year, or when a Single Audit adds grant-level schedules. Our comparison of nonprofit accounting software covers pricing and fit.

Sage Intacct. The Nonprofit QuickStart includes a statement of activities in 958 format and a “990IX Statement of functional expenses” report with program, management and general, and fundraising columns (Sage Intacct help, last modified October 8, 2026). Its Fixed Assets Management module has a Depreciation Roll Forward report showing beginning, period and ending accumulated depreciation by asset; it does not include cost additions and disposals columns, so you still need a cost roll-forward (Sage Intacct help, last modified October 8, 2026).

Oracle NetSuite. The NFP reports bundle includes a Statement of Activity, Statement of Functional Expense, Statement of Financial Position and Grant Statement of Activity, and the documentation points to Revenue Restriction Management for reports on revenue released from restrictions (Oracle NetSuite help, no date shown).

MIP Accounting (Momentive Software). Momentive says MIP Accounting produces a statement of functional expenses, budget-versus-actual by fund and grant-specific reports, with a built-in audit trail (Momentive Software, last modified September 29, 2026). The page does not mention a SEFA report, so confirm how you would map awards to Assistance Listing numbers.

Aplos and QuickBooks Online. Aplos lists income statement and balance sheet by fund, general ledger and budget-to-actual reports (Aplos, no date shown). QuickBooks Online adds a Statement of Activity and Statement of Financial Position when you set the company to a nonprofit tax form (Intuit, updated August 5, 2026). Neither page names a restriction roll-forward report, so expect to build that schedule in a spreadsheet.

PBC portals. Many audit firms send requests through a portal such as Suralink, which does not publish prices (Suralink, no date shown).

How we researched this

We read the audit and SEFA requirements in 2 CFR 200 Subpart F, the equipment and personnel rules in 200.313 and 200.430, FASB ASU 2016-14 and ASU 2018-08, and the IRS Schedule D instructions. We reviewed the pages that rank for this term from the National Council of Nonprofits, Aplos, MIP, Donorbox and others. Most give a document list without roll-forwards, tie-outs or Single Audit items, and the Aplos page still cites the old $750,000 threshold. We checked each software claim against vendor documentation on October 9, 2026, and we note where a source sells the product.

Related guides

Frequently asked questions

What is a PBC list in a nonprofit audit?

A PBC list is the auditor’s request for schedules and documents prepared by client, meaning your finance team. It usually covers the trial balance, reconciliations, roll-forwards and supporting files. Sending it complete and tied out before fieldwork means fewer follow-up requests during it.

How far in advance should we start preparing for the audit?

Start the reconciliations as part of your normal year-end close, then prepare the roll-forwards once the trial balance is final. Agree the request list and dates with your auditor at the planning meeting. Upload everything before fieldwork starts.

Does my nonprofit need a Single Audit?

You need one if you expend $1,000,000 or more in federal awards in a fiscal year, including federal money received through a state or another nonprofit. The threshold applies to fiscal years beginning on or after October 1, 2024. Your state may set its own audit requirements for state grants or charitable registration.

What reports should we pull from our fund accounting software?

At minimum, pull the trial balance by fund, general ledger detail, the statement of activities and functional expense report, AP aging, the fixed asset register and an expense report by grant. Most systems also need a custom report or spreadsheet for the net assets with donor restrictions roll-forward.

Sources

Sherman Hsieh

CEO & Editor-in-Chief, Business-Software.com
Independent analysis of enterprise software — ERP, CRM and more
Sherman Hsieh is the founder, CEO, and editor-in-chief of Business-Software.com. He leads the site's independent, buyer-focused coverage of ERP, CRM, and other business systems, including vendor-neutral comparisons, pricing analysis, and implementation guidance. Before founding Business-Software.com, Sherman was an executive at Siebel ...

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