If you’ve never been through an audit, it’s honestly hard to picture what’s going to happen.
Most people assume it’s very structured. Like someone goes in with a checklist, and starts checking boxes.
It’s not like that exactly, per say.
It happens to be a little more… fluid, I suppose, as things continue to unfold through phases. However, it doesn’t always seem like obvious steps once you’re in the process.
So what are audit procedures?
Put simply, they’re just the things an auditor does to get comfortable with your financial statements.
That sounds vague, but it kind of is.
They’re not trying to re-create your accounting. And they’re definitely not checking every single transaction. That would take forever.
Instead they are trying to check if anything doesn’t make sense when they look a bit closer.
It usually starts pretty quietly
There’s no big “audit starts now” moment.
It often begins with a few conversations. Questions about your business, how things run, how you record transactions.
At this point, it doesn’t even feel like an audit yet.
But this part matters. If they don’t understand how your small business works, everything after that becomes guesswork.
Then they start narrowing in on certain areas
Not everything in your financial statements gets the same attention.
Some areas are just more likely to have issues.
Revenue is one. Inventory, if you have it. Anything that involves estimates or judgment.
So instead of spreading their time evenly, they focus more on those spots.
That’s why audits can feel very different depending on the business.
There’s usually a point where they look at your process
It’s not only pertaining to the numbers, but how exactly those numbers are created.
A common factor they might ask about is who approves payments, and how invoices are entered.
Sometimes they’ll follow one transaction from start to finish just to see how it moves through your system.
And sometimes what’s written down as the “process” isn’t exactly what’s happening day to day. That’s pretty common.
Then comes the part everyone notices
The document requests.
This is where your inbox starts getting busier.
They’ll ask for things like bank statements, invoices, contracts, payroll records. You send them over, they review, and then come back with more questions.
It’s rarely just one round.
It goes back and forth a bit. That’s normal.
Why don’t they just check everything?
This comes up a lot.
The short answer is time.
So they use sampling. They pick certain transactions or balances to test.
They’ll delve a little deeper if something feels odd.
It’s not random, but it’s not exhaustive either.
Fieldwork is when it feels like a lot is happening
You’ll hear that term during the audit.
This is the stage where most of the checking is actually happening.
More demands, more follow-ups, a little bit more pressure to keep things moving.
It can be a little intense for some amount of time.
After that, things shift a bit
There’s less digging into individual documents and more looking at everything together.
Do the numbers make sense as a whole?Is there anything that still doesn’t feel right?
They’ll tell you if something needs tweaking.
Typically bank statements, invoices, contracts, payroll information and accompanying schedules.
And then the report comes at the end
This is what everything leads to.
The audit report is basically the auditor saying whether your financial statements can be relied on.
That’s the part lenders and investors care about.
All the earlier steps are just building toward that.
So what are audit procedures, really?
If you strip everything back, it’s not as complicated as it sounds.
They:
- try to understand your business
- focus on where problems might show up
- check selected items
- ask questions along the way
- and then form an opinion
They’re not trying to catch every small mistake.
They’re trying to be comfortable with the overall picture.
FAQs
What are the main audit procedures in Canada?
They include understanding the business, identifying higher-risk areas, testing selected transactions, and forming an audit opinion.
What is audit sampling?
It’s checking a portion of transactions instead of everything, based on what seems important.
How do auditors test internal controls?
They look at how processes work and check whether those processes are actually being followed.
What documents do auditors review?
Usually bank records, invoices, contracts, payroll data, and supporting schedules.
What happens during fieldwork?
This is when most of the detailed work happens, including document reviews and follow-ups.
How are audit findings reported?
Through an audit report, along with discussions about any issues or observations.
Why SRJ Assurance?
Most clients don’t ask us about audit procedures in technical terms.
They just want to know what’s coming and how to deal with it.
We try to keep things straightforward. Explain what’s happening as we go. Keep the process going and minimize friction.
If you are heading into an audit and would need a clearer understanding of what to expect, SRJ Chartered Professional Accountants are always available to walk you through the process and answer your questions.