Audit support process: what to expect at each stage

Facing a CRA or performance audit can feel urgent and complex. This article walks through the audit support process in six clear stages so you know what auditors typically do, what records they will request, and what practical steps you should take at each point. The guidance is Canada-focused and links to official audit expectations. When a professional accounting firm is involved, the work usually centres on preparing audit-ready records, packaging evidence, and guiding responses.

Stage 1: Before an audit — reduce risk and get audit ready

Audit-preparation checklist

Proactive preparation reduces stress and shortens response times if an audit starts. Use this checklist to create an audit-ready file:

• Organize bank statements and reconciliations for the audit period.
• Gather sales invoices, purchase invoices, and contracts.
• Compile payroll records, T4s, and source deductions evidence.
• Collect GST/HST returns and supporting invoices and credits.
• Prepare ledgers, trial balance, and year-end financial statements.
• Secure digital copies with clear file names and maintain original-source backups.
• Document accounting policies and any unusual transactions or related-party entries.

How to organize records and custody steps

Organizing evidence early saves time during an audit. The Community Tool Box checklist for organizing audits recommends deciding what information you need, budgeting time for data collection, and negotiating access before an audit begins, which applies equally to preparatory work you do as an auditee Chapter 31, Section 9. If you use a cloud accounting system, tidy your folders, note user access, and create secure share links to limit friction when auditors request documents.

What an accounting firm can do in preparation

An accounting firm like Verma Accounting & Financial Services can perform reconciliations, identify gaps, prepare audit-ready reports, and reduce audit exposure by ensuring records are CRA-compliant. Verma advertises audit support and audit-ready financials on its site and offers a free consultation and onboarding to help with cleanup and organization Verma Accounting & Financial Services. If bookkeeping improvements are needed, consider working with a provider who offers ongoing reconciliations and controlled cloud access to lower future risk, for example through dedicated bookkeeping services.

Stage 2: Notification and intake — how auditors contact you and initial steps

How the CRA or a performance auditor will contact you

The Canada Revenue Agency normally begins an audit by contacting the taxpayer by mail or phone and will set the date, time, and location for the audit. The CRA guidance explains that on-site audits usually take place at your business, your residence, or your representative’s office, and that the auditor will show valid identification upon arrival What you should know about audits. For performance audits carried out by public auditors, the Office of the Auditor General publishes an auditee guide describing objectives and expected interactions, including documentation and interviews What to Expect.

Immediate actions on first contact

• Verify the auditor’s identity and contact details before sharing sensitive documents.
• Preserve all relevant records and stop any routine destruction policies for the audit period.
• Note the scope and timeline specified in the notification and inform your accountant immediately.

Stage 3: Document requests and evidence gathering — what auditors typically ask for

Common records requested in CRA and performance audits

Auditors seek evidence that supports reported figures and compliance. Frequently requested items include:

• Bank statements and cancelled cheques, and reconciliations.
• Sales and purchase invoices, credit notes, and receipts.
• Payroll registers, T4/T4A slips, payroll remittance records, and employment contracts.
• GST/HST returns, supporting invoices, and computation workpapers.
• Contracts, lease agreements, and related-party documentation.
• Accounting system extracts, audit trails, and user access logs for key accounts.
• Year-end working papers, trial balance, and financial statement schedules.

The Office of the Auditor General notes auditors will request documentation, interviews, and site access to gather sufficient evidence to assess performance against criteria What to Expect. The CRA guidance similarly identifies on-site visits and documentation requests as routine parts of their audits What you should know about audits.

How an accounting firm packages evidence

Your accountant will collect and index requested documents, prepare reconciliations and narratives that explain anomalies, and supply secure cloud shares or a controlled data room. Verma Accounting emphasizes secure, cloud-based systems and can produce audit-ready reports that present reconciled balances and supporting schedules to reduce auditor follow-up questions Verma Accounting & Financial Services.

Stage 4: On-site procedures and interviews — what happens during visits

Typical auditor activities during a site visit

When auditors arrive on site they will present ID, explain the audit scope, and request access to original records. Typical procedures include walkthroughs of records and processes, interviews with staff, sample testing of transactions, and inspection of original documents or inventory. The CRA guidance highlights that auditors will present valid identification and that visits may be at your location or a representative’s office What you should know about audits.

Preparing staff and protecting privacy

• Brief staff on the audit purpose and appropriate responses: answer factual questions, do not guess, and direct complex technical or legal questions to your accountant.
• Limit access to unrelated systems and ensure originals remain in custody with a responsible person present.
• Document interviews and retain copies of any material handed to auditors.

If a physical visit is not required, many aspects of evidence review can occur remotely through secure cloud shares and controlled access logs. Verma Accounting supports remote and in-person engagements for clients across Ontario and Canada Verma Accounting & Financial Services.

Stage 5: Reporting and findings — how auditors present results and how to respond

Draft findings, responses, and final reports

After evidence gathering the auditor will usually issue draft findings or observations and provide an opportunity to respond with factual corrections or explanations. The auditor then issues a final report or audit results. For government performance audits, the auditee guide describes interaction principles and the opportunity to respond to draft findings What to Expect. Your response should be factual, supported by documentation, and lodged within the timelines the auditor sets.

How an accountant helps at this stage

An accountant prepares written responses, compiles supporting schedules, quantifies the financial impact of proposed adjustments, and negotiates factual errors. If the audit proposes tax adjustments, your accountant can estimate potential additional taxes and prepare amended filings where acceptance is appropriate.

Stage 6: Post-audit follow-up and remediation — next steps after the report

Accepting findings, appealing, and remediation options

After the final report you must decide whether to accept findings or to object. For CRA tax assessments you can file a notice of objection according to CRA procedures and timelines; consult the CRA guidance for specific steps and deadlines What you should know about audits. An accountant can advise whether to accept adjustments, prepare corrected returns, or assemble an objection package with supporting evidence.

Reducing future audit risk

Implement recommendations, tighten bookkeeping and payroll controls, and consider ongoing monthly bookkeeping or payroll services to keep records audit-ready. A regular review cycle limits the size and complexity of future audits and creates clear, reconciled histories for auditors to verify. If you need cleanup or ongoing support, Verma Accounting offers onboarding, cloud-based bookkeeping, and audit support to help you maintain compliant, organized records bookkeeping and audit support.

Practical next steps you can take right now

• Hold and preserve all records for the audit period and stop routine disposal policies.
• Contact your accountant immediately and provide the audit notification and scope.
• Create a secure shared folder and compile the checklist items above.
• Brief staff and appoint a single point of contact to coordinate requests.