Financial Audit-Readiness Checklist

What a lender, investor, or auditor will expect to see — organized in advance.

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Core Records

Financial statements for the last 3 years (P&L, balance sheet, cash flow)
Bank and credit card statements reconciled monthly
General ledger with no unexplained entries

Supporting Documents

Contracts and agreements for major revenue sources
Fixed asset list with purchase dates and values
Loan and lease agreements

Compliance

Tax returns for the last 3 years
Payroll tax filings and W-2/1099 records
Sales tax filings by state

Process

Documented approval process for expenses
Segregation of duties for anyone handling money
Written record retention policy

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Frequently Asked Questions

How many years of records should I actually keep on hand?

Three years of financial statements and tax returns is the common baseline lenders and auditors expect, though some situations call for longer — check your specific lender or industry requirements.

What does "segregation of duties" mean for a small business with few employees?

It means no single person handles a transaction start to finish — for example, the person who approves an expense shouldn't also be the one who pays it. Small teams can achieve this with owner review steps even without dedicated staff.

Do I need to do this if nobody is auditing me right now?

Being audit-ready pays off even without a scheduled audit — it's the same organization a lender wants before approving a loan, or an investor wants before writing a check.

Is there a Canadian version of this checklist?

Yes — see the Financial Audit-Readiness Checklist (Canada), which references T2 returns, T4/T4A records, and GST/HST filings instead of their US equivalents.

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