China Company Audit Preparation: Document Checklist

TL;DR

Start from the signed financial statements and final trial balance, then build an indexed “prepared by client” file that supports every material balance and disclosure.
Auditors commonly request ledgers, bank and third-party confirmations, contracts, fapiao, tax returns, payroll, asset records, corporate approvals and related-party information. The exact sample and procedure remain the auditor's decision.
Management remains responsible for the accounts, evidence and representations. Do not create documents after the event, answer confirmations for third parties or ask the auditor to make unsupported records acceptable.

First confirm what audit is being prepared

Before collecting files, identify the reporting period, financial framework, language, report recipient, group instructions and intended use. A statutory financial-statement audit, group component audit, dividend support, transaction review and liquidation audit may ask for overlapping records but apply different scope and deadlines.

The China statutory audit guide explains when audits arise and what drives work and cost. The audit vs annual report comparison prevents the common mistake of treating the business annual report or tax filing as the audit itself.

Ask the audit firm for its engagement letter and initial PBC—“prepared by client”—list. Assign one company coordinator, but keep business owners responsible for their own evidence and explanations.

What auditors typically request

Area	Typical starting documents	What the auditor is trying to understand
Financial statements	Signed draft statements, trial balance, general ledger, account mapping	Whether the statements reconcile to the books and applicable framework
Bank and cash	Statements, reconciliations, account list, facilities, confirmation details	Existence, completeness, restrictions and unexplained differences
Revenue and receivables	Contracts, orders, delivery or acceptance, fapiao, aging, receipts	Occurrence, cut-off, measurement and collectability
Purchases and payables	Procurement approval, contracts, receipt evidence, fapiao, aging, subsequent payments	Completeness, cut-off and business purpose
Inventory and assets	Count records, inventory movement, fixed-asset register, additions and disposals	Existence, ownership, valuation and impairment indicators
Payroll	Employee list, contracts, payroll registers, bank payments, IIT and contribution records	Completeness, authorization and reconciliation of employee cost
Tax	VAT, CIT, IIT and other returns, payments, reconciliations, open inquiries	Agreement between tax filings, books and uncertain positions
Equity and governance	Business license, articles, shareholder register, capital evidence, resolutions	Legal ownership, capital movements and approval of significant matters
Related parties	Group chart, agreements, invoices, balances, pricing support	Completeness, substance, disclosure and consistent counterparty records
Legal and commitments	Major contracts, disputes, guarantees, leases and subsequent events	Obligations or disclosures not obvious from the ledger

This is a starting index, not a guarantee that every item will be requested or sufficient. The auditor may select samples, send confirmations, inspect originals, observe inventory or ask for additional evidence.

Six-stage preparation process

1. Lock the reporting population

Complete the year-end close, post approved adjustments and produce one controlled trial balance. Reconcile the draft financial statements to it. If the local books and headquarters package differ, provide a transparent bridge rather than two unexplained versions.

2. Build balance-sheet schedules

Prepare a lead schedule for every material account showing opening balance, movements, adjustments and closing balance. Attach detailed subledgers and explain old, negative or unusual items.

3. Index source evidence

Name files consistently and cross-reference them to the PBC list, ledger account and audit sample. Keep contracts, fapiao, delivery, bank and approval evidence together for each selected transaction.

4. Prepare confirmations without controlling responses

Compile complete bank, customer, supplier, lawyer and related-party contact details requested by the auditor. Management may authorize and help distribute confirmations under the audit procedure, but should not fabricate or intercept independent replies.

5. Resolve differences through the books

When a schedule does not agree to the ledger, investigate the underlying transaction. Post a supported adjustment through the normal approval process where needed. Do not overwrite the schedule merely to match the trial balance.

6. Track questions and final deliverables

Maintain one request log with owner, date sent, status and reviewer. Before signing management representations or the financial statements, understand all proposed adjustments, uncorrected differences, disclosures and open matters.

Copy-pastable audit-readiness checklist

[ ] Engagement scope, period, framework and deadline confirmed
[ ] Final trial balance agrees to draft financial statements
[ ] General ledger and account mapping exported
[ ] Every material balance-sheet account has a lead schedule
[ ] Bank statements and reconciliations are complete
[ ] Receivable and payable aging agrees to the ledger
[ ] Revenue and purchase samples can be traced end to end
[ ] Inventory and fixed-asset registers are current where applicable
[ ] Payroll agrees to bank, IIT, contributions and expense
[ ] Tax returns and payments reconcile to tax accounts
[ ] Capital, equity and corporate approvals are indexed
[ ] Related parties, balances and agreements are complete
[ ] Major contracts, disputes, guarantees and subsequent events disclosed
[ ] Confirmation contact details validated
[ ] PBC request log has owners and status
[ ] Proposed adjustments and representations understood by management

How to make the file easier to audit

Give each request one response location and one version owner. Use original electronic records where available, preserve file metadata and avoid screenshots when the underlying statement or invoice can be provided. Explain unavailable documents early and propose alternative evidence rather than waiting for the final week.

Separate routine questions from accounting judgments. A missing bank statement needs a document owner; a revenue-recognition or tax-provision question needs finance and management analysis. Escalating the right issue to the right person saves more time than sending a large unindexed folder.

Common mistakes

Starting the audit before the trial balance and statements reconcile.
Sending thousands of files without an index or link to the request list.
Providing fapiao without the contract, delivery and payment trail.
Leaving old receivables, payables, advances or suspense balances unexplained.
Allowing local and group ledgers to differ with no reconciliation bridge.
Creating or backdating documents after the auditor asks for them.
Replying to bank or customer confirmations on behalf of the third party.
Posting audit adjustments without management understanding or approval.
Omitting related parties because there was no year-end balance.
Treating tax returns as proof that the financial-statement treatment is correct.
Waiting until fieldwork to disclose litigation, guarantees or subsequent events.
Expecting the auditor to repair bookkeeping while remaining independent.

Frequently asked questions

Does every document need a company chop?

No universal rule applies to every working paper. Original corporate approvals, contracts and bank forms may have execution requirements, while internal schedules often need clear preparation and review evidence. Follow the engagement request and preserve the authentic source.

Can scanned or electronic records be used?

Often yes, subject to authenticity, completeness and the auditor's procedure. Keep the original electronic file and audit trail. A screenshot with no source, sender or transaction context is weaker evidence.

Who should answer audit questions?

Use one coordinator for tracking, but let the person responsible for the underlying process answer: finance for reconciliations, HR for payroll data, legal for disputes and management for judgments and representations.

What if a requested document does not exist?

Say so promptly. Explain why, identify what alternative evidence exists and assess whether the books or controls need correction. Do not manufacture a document after the event.

If the request list is exposing unreconciled balances or missing records, talk to ChinaBizPro about a pre-audit clean-up and controlled PBC file before formal fieldwork begins.

China Audit Preparation: What Auditors Typically Request