What it is
Professional services firms sell time and expertise. Their balance sheets hold unbilled time, receivables and client money, and their revenue depends on billing practices and realization. This program covers the specific risks: whether unbilled time can be billed, whether contingent fees are recognized too early, and whether client funds are safe.
The workbook has procedures with objective, assertion and sample guidance, a risk tab, completion tracking and tie-outs. Add steps for state bar or licensing requirements that apply to the firm.
When to use it
- At planning for a law, accounting, engineering or consulting firm audit.
- When unbilled time or realization is a significant risk.
- When client trust accounts must be tested and reconciled.
What’s inside
- Billing, cutoff and performance obligation procedures by arrangement type
- Unbilled time schedule, valuation and realization analysis
- Retainers, client trust account and receivable procedures
- Owner compensation, deferred compensation and claims procedures
- Risk assessment tab and tie-outs
Standard cited
This template follows ASC 606 / AU-C 540. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use. See AU-C 540 explained.
Questions
How should contingent fees be recognized?
They are variable consideration and are included only to the extent a significant reversal is not probable. The program tests the estimate against the status of the matter and what happened after year end.
What evidence supports unbilled time?
Time records, approved rates, and billing after year end. The program also tests the timekeeping control environment.
Are client trust accounts the firm’s assets?
No. They hold client money, and the program tests segregation, reconciliation and authorized disbursements.
Related templates
- Professional Services WIP and Realization Analysis
- Audit Program: Accounts Receivable and Revenue
- Cutoff Testing Workpaper (Sales, Purchases, Inventory)
- ASC 606 Revenue Recognition Schedule
Last updated 11/05/2026. All free templates.