In its simplest form, a business audit in Canada is defined as a systematic assessment of a company’s financial resources - these include the thorough examination of various financial statements, purchase transaction records and inventory. The Canadian Revenue Agency (CRA) conducts such audits on a random basis. So for business owners like you, the best way to keep out of trouble is to be prepared. Here are some small business accounting tips to help you stay on top of an unexpected business audit:

A financial audit is all about looking into the financial net worth of your company. This primarily involves checking business accounting records, internal control policies and other major business financial concerns.

The rule of thumb when it comes to running your own business is to have a clear idea of how your business finances work. This means you are required to learn the ropes to basic accounting concepts such as profit analysis and cashflow management. But if your business is on the road to expansion, your knowledge of basic accounting alone may not suffice. At this point, you need a more advanced set of accounting skills, such as forensic accounting. Forensic accounting basically involves a variety of techniques to identify fraudulent transactions in your SME.

Every once in a while, you will be required to present your most recent financial statements to the tax office or to your potential investors.

As your SME moves into a more advanced phase, your critical business numbers will inevitably go along with it. More than anything else, this means you need to pay closer attention to your business finances. You can do this through an internal financial audit. A financial audit works well in keeping profit initiatives in check, ensuring compliance with accredited accounting regulatory bodies and protecting you from fraudulent business transactions. If you want to take a dip into financial audit, here’s a basic checklist that can serve as a guide:

Internal Audit is defined by the Institute of Internal Auditors as a dynamic profession involved in helping organizations achieve their objectives. It is concerned with evaluating and improving the effectiveness of risk management, control and governance processes in an organization. Internal auditors work across all areas and apply a systematic, disciplined and independent evaluation on both the tangible and intangible aspects of the operations. After which, the internal auditors present their report, containing the status of the company in connection with its goals – the risk that they are currently facing, the risks that they may face in the future, how the risks are being handled,  and identifying what can be improved. There are just some of the things that internal auditors need to find out about your company. With these tasks at hand, is it really wise to outsource Internal Audit? YES. And here’s why: