Financial Audit-Readiness Checklist (Canada)

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 (T2) for the last 3 years
Payroll remittance filings and T4/T4A records
GST/HST and provincial sales tax filings

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 T2 returns should I keep on hand?

Three years is the common baseline lenders and auditors expect, though the CRA generally requires you to retain records for six years — keeping that full window on hand is the safer habit.

What does "segregation of duties" mean for a small Canadian 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 this if I'm not being audited 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 US version of this checklist?

Yes — see the Financial Audit-Readiness Checklist, which references IRS tax returns, W-2/1099 records, and state sales tax filings instead of their Canadian equivalents.

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