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If you plan to shift close tasks to an offshore team, the handover must protect audit readiness. This playbook maps core finance tasks to the relevant financial statement assertions, the “prepared-by-client” (PBC) artifacts auditors expect, the control steps to capture in your SOPs, and the review notes that keep evidence complete and on time. It is written for US GAAP and IFRS users in the US and UK.

What this playbook covers

  • Task-to-assertion mapping for high-volume close activities
  • PBC artifact lists that tie out to the trial balance and subledgers
  • Control steps that offshore teams can operate daily
  • Cut-off procedures that prevent period leakage
  • Review notes and sign-off structure to keep files audit-ready

Core concepts and definitions

Assertions. The audit lens: existence, completeness, rights and obligations, accuracy/valuation, cut-off, classification, and presentation/disclosure.
PBC. Prepared-by-client evidence the auditor requests and tests.
Control. A preventive or detective step that reduces risk and leaves a traceable record.
Cut-off. Ensuring transactions are recorded in the correct period.
Review note. A short, dated comment that explains what was tested, exceptions found, and how they were resolved.

Task → Assertion → PBC → Control → Review notes

Use this table as your base SOP. Adapt rates, materiality, and owners to your environment.

A. Cash and bank reconciliations

  • Assertions: existence, completeness, accuracy, cut-off
  • PBC: bank statements, reconciliation workbook with outstanding items aging, GL bank account detail, proof of post-close clearing
  • Controls: preparer-reviewer segregation; numbered recon template; threshold for reconciling items; evidence of follow-up on items older than 30 days
  • Review notes: “Agreed GL ending balance to bank. Traced top 10 outstanding checks to subsequent clearing. One stale item >90 days escalated to AP owner; cleared on 8 Oct.”

B. Accounts receivable and revenue (invoicing, credit notes, bad debt)

  • Assertions: existence, accuracy/valuation, cut-off, rights
  • PBC: AR aging tied to GL, top customer statements, sample invoices and delivery/fulfillment evidence, credit memo log, allowance rollforward with policy
  • Controls: three-way link between order, delivery, invoice; credit memo approval matrix; bad debt calculation with prior-period back-test
  • Review notes: “Sampled 25 invoices across month-end. Verified delivery date ≤ invoice date; two exceptions corrected. Allowance % benchmarked to 12-month loss rate.”

C. Accounts payable and accruals

  • Assertions: completeness, accuracy, cut-off, obligations
  • PBC: AP aging tied to GL, GR/IR report, unmatched PO receipts, accrual workbook with supporting estimates, top vendor statements
  • Controls: three-way match (PO, receipt, invoice); expense accrual checklist for recurring vendors; cut-off test for receipts in 5-day window around month-end
  • Review notes: “Reviewed 15 receipts 3 days pre/post close; two received pre-close were posted next period. Adjusting JE recorded. Accruals agree to contracts.”

D. Inventory (or unbilled WIP) and COGS

  • Assertions: existence, completeness, valuation, cut-off
  • PBC: inventory subledger, count sheets with variances, cost build and standard vs actual analysis, write-down calculation, WIP aging
  • Controls: cycle counts with thresholds; price-list governance; obsolescence policy applied quarterly; receiving cut-off test
  • Review notes: “Observed cycle count videos for Site A; variances <0.3%. Obsolescence reserve recomputed using aging >180 days.”

E. Fixed assets and depreciation

  • Assertions: existence, rights, valuation, classification
  • PBC: fixed asset rollforward, additions support (invoice, PO, receipt), disposals with approval, capitalization policy, depreciation schedule tied to GL
  • Controls: threshold policy; review of project-to-asset transfers; impairment indicator checklist each quarter
  • Review notes: “Traced top 5 additions to invoice and receipt; no expense misclassifications. Depreciation agrees to policy useful lives.”

F. Leases (ASC 842 / IFRS 16)

  • Assertions: completeness, valuation, classification, presentation
  • PBC: lease register, contracts, discount rate memo, ROU asset and liability rollforward, remeasurement logs
  • Controls: intake checklist for new contracts; quarterly reconciliation lease register ↔ AP/Facilities; system change log review
  • Review notes: “Two new copier leases ingested with IBR 6.2%. Recalc of NPV within tolerance. Disclosure table updated.”

G. Payroll and benefits

  • Assertions: accuracy, cut-off, obligations, classification
  • PBC: payroll register by period, tax filings, headcount reconciliation, bonus accrual calc, benefits invoices
  • Controls: review of gross-to-net; segregation between HR master data and payroll processing; post-pay accrual for days worked not paid
  • Review notes: “Agreed sample of 10 employees to contracts and rates. Bonus accrual tied to board-approved plan.”

H. Revenue recognition for subscriptions/projects

  • Assertions: accuracy/valuation, completeness, cut-off, presentation
  • PBC: revenue waterfall, deferred revenue rollforward, sample contracts with performance obligations, variable consideration memo
  • Controls: contract review checklist, system rules for recognition, quarterly standalone selling price validation
  • Review notes: “Allocated consideration across two obligations; variable refund rate applied per policy. Waterfall ties to GL.”

I. Taxes (current and deferred) — high level

  • Assertions: completeness, valuation, presentation
  • PBC: tax provision workbook, return-to-provision reconciliation, deferred tax rollforward, uncertain tax position memo
  • Controls: sign-off by qualified reviewer; rate recon with analytics vs prior year; cut-off for material temporary differences
  • Review notes: “Rate rec variance vs PY explained by R&D credit. DTA recoverability reviewed; no valuation allowance change.”

Cut-off procedures your offshore team can run every close

  1. Revenue cut-off. Test shipments, delivery logs, or service acceptances 3 business days before and after month-end. Correct any mis-posted items.
  2. AP and GR/IR. Match receipts to invoices across the 5-day window. Accrue where receipt exists without invoice. Reverse next period.
  3. Payroll. Accrue wages for days worked but unpaid. Reverse after the first payroll of the new month.
  4. Cash. Trace large reconciling items to subsequent clearing within 10 business days. Escalate items older than 30 days.
  5. Journal entries. Require preparer narratives for all cut-off JEs that state the assertion addressed, data source, and reversal plan.

Evidence standards and file hygiene

  • One source of truth. A numbered PBC index that links each request to a dated workbook or PDF.
  • Traceability. Every workbook should tie to the GL or subledger with a clear reconciliation tab.
  • Sampling. Use risk-based samples. Document method, population, and results.
  • Time stamps. Preparer and reviewer dates, with version history turned on.
  • Exception logs. A simple sheet that lists issues, owner, due date, and resolution.

PBC index template (copy and adapt)

PBC #AreaAssertion(s)File nameSource systemPeriodPreparerReviewerTie-out1Bank recsExistence, completeness01_Bank_Recs_Mar25.xlsxBank, GLMar-2025Offshore AnalystControllerGL 1000.1002AR aging + samplesExistence, valuation, cut-off02_AR_Aging_Mar25.xlsxERP ARMar-2025Offshore SrRevenue LeadGL 12003AP and accrualsCompleteness, cut-off03_AP_Accruals_Mar25.xlsxERP APMar-2025Offshore AnalystFP&AGL 20004Fixed assets rollforwardExistence, rights04_FA_Rollforward_FY25Q1.xlsxFA subledgerQ1-FY25Offshore SrControllerGL 1500

Review notes that pass audit

Keep each note short and specific:

  • The what: “Agreed AR aging total to GL 1200.”
  • The how much: “Variances of 0.2% within materiality.”
  • The exceptions: “2 items posted in wrong period. JEs 45621, 45622 recorded.”
  • The closure: “Re-tested after JE; no variance.”

Store review notes in the same folder as the PBC item, or as a tab in the workbook. Tag with the period (e.g., “Mar-2025”).

RACI and operating cadence

  • Preparer (offshore). Builds schedules, performs tests, drafts JEs, documents evidence.
  • Reviewer (onshore). Validates tie-outs, signs off controls, approves JEs.
  • Owner (process lead). Resolves exceptions, liaises with auditors, updates policy.
  • Frequency. Monthly for core areas, quarterly for estimates and reserves, annual for policies and disclosures.

Quality gates before you hand over to audit

  1. PBC index is complete and tie-outs match the GL.
  2. All review notes are closed or tracked with a due date.
  3. Exception log has no items older than 30 days without an owner.
  4. Sensitive evidence (payroll, tax, contracts) is access-controlled.
  5. Cut-off tests are documented with samples and conclusions.

How to use this “GAAP/IFRS Handover Playbook for Offshore Teams: Controls, Evidence, Cut-off”

  • Start with two processes, not ten. Good first picks: bank recs and AP accruals.
  • Run a two-cycle pilot with shadow review before full handover.
  • Lock the PBC index, SOPs, and naming rules before the first external request.
  • After the first audit round, add the auditor’s feedback to your SOPs.

Takeaway

If you want a ready-to-run set of SOPs, PBC templates, and review checklists tailored to your ledger and audit scope, Madras Accountancy will stand up your GAAP/IFRS Handover Playbook for Offshore Teams: Controls, Evidence, Cut-off, train the offshore team, and support your first audit cycle.