Bookkeeping Audit Checklist

Reading Time: 4 minutes

It’s always a good idea to conduct random audits of your company’s financial books to make sure that your company’s data is stored in the right manner and in the right accounts.

Not only it helps you to maintain accuracy in your financial data, but also helps you to be regulatory compliant when you are faced with an audit by the IRS.

To keep your data accurate, we have mentioned a checklist to maintain while conducting an audit of your financial books.

Why Do You Need a Bookkeeping Audit Checklist

Bookkeeping audit checklists help you with a smooth financial audit process. The IRS lawfully requires auditing both public and private firms. Therefore, if you maintain an efficient bookkeeping system, it will help you:

  • Avoid the risk of fraudulent practices in a company
  • Ensure that your financial statements comply with state standards and regulations
  • Help you make informed decisions that will you to optimize operations

In the coming section, let’s review some of the checks to maintain on your financial books:

Bookkeeping Audit Checklist

Review Payroll Processes & Record-Keeping

Payroll audits can be subject to many errors because when a company hires new staff or fires old employees, it needs to update its chart of accounts and update the information in the payroll system.

It helps companies to make proper payments to their current employees at the right time. 

This is why we audit the payroll records on a regular basis to ensure that everyone was paid during the time they were on the payroll roster.

Other things to keep in mind during payroll bookkeeping and payroll audit could be:

  • Check each employee’s pay distribution against the rate of pay in the payroll ledger to ensure the accuracy of payment.
  • Verify that hourly employees accurately recorded their working hours for the applicable period.
  • Review the payroll ledger accounts to ensure that they reflect accurate payment information.
  • Match each check to the corresponding transaction listed in the ledger, including paychecks, withholding, insurance, and taxes.
  • Make sure that the employees are properly categorized. Falsely categorizing your employees may result in penalties by the IRS.

More details on the payroll by the IRS.

There may be a number of other regulations as well that govern your payroll, consult a qualified CPA to know more details.

Review Bank Reconciliation

Bank reconciliation should be considered one of the important checklists while conducting a bookkeeping audit.

You have to check the bank statement for any reconciling items, such as unpaid checks or incoming deposits, and make sure they are accurately entered into the accounting software for the business.

Furthermore, you have to verify that any differences between the bank statement and the general ledger are looked into and fixed as soon as possible. 

The consequences of manipulating accounts could lead to possible jail time. A healthcare services company called HealthSouth was involved in financial fraud that entailed falsifying bank reconciliations.

In order to boost earnings and conceal expenses, the company’s CEO and CFO faked bank statements and reconciliations. After some time, they got exposed and the company’s executives were charged with crimes.

Petty Cash Verification

It is crucial to carefully check the petty cash transaction history in order to find potential theft. Verifying that the petty cash reconciliation correctly accounts for all funds is also essential.

Since petty cash is the most vulnerable account in a small firm, it’s critical to check that the register balance and cash balance match.

For instance, in the past, there have been numerous cases in which people authorized petty cash for their personal use. In 2018, a Catholic nun was found to have stolen over $800,000 in petty cash from the school funds.

The nun had been making unlawful purchases and withdrawals from the petty cash account for a number of years. Upon the discovery of the nun’s action, several charges were imposed on him. 

Make sure that all calculations must be accurate, and that each transaction in the register is accompanied by a receipt.

Reviewing Expense Transactions

Examining expense transactions can help detect and prevent fraud. This includes identifying unauthorized expenses, duplicate payments, and suspicious transactions.

One of the most famous expense capitalization frauds is the WorldCom fraud. Not only the company faced huge monetary penalties, but several executives were charged as well.

You can review your expense transactions by validating the expense ledger accounts which can ensure that each transaction is posted accurately.

This will also help you gain insights into your spending patterns and trends which can help you forecast future expenditures.

Bank Statement Analysis

The auditor verifies the transactions in the bank statements and the transactions in the ledger by doing a bank statement analysis. They can use this to check for errors and ensure that all transactions have been accurately recorded.

All kinds of invoices should correspond with the bank statement entries. Bank statement analysis can also be used by auditors to confirm that the business is meeting its financial commitments, such as tax payments and banking rules.

Some of the major advantages of bank statement analysis include:

  • Detect and prevent fraud and errors
  • Helps identify a company’s financial position 
  • Helps in tax preparation and audits
  • Prediction of future cash spending


In this article, we tried to make you aware of the consequences of false or inefficient bookkeeping practices, and some general steps to avoid such practices in your business.

However, a piece of general advice is never a replacement for practical help from an experienced CPA. At AkifCPA, we have a dedicated group of CPAs to make sure that your financial books are up-to-date and regulatory compliant.

Moreover, even if you are faced with an IRS audit, our CPAs can defend your tax returns and financial flows.

Consult us today, we are just a click away!

Sign Up For Our Weekly Newsletter
Based on 107 reviews
powered by Google
Annie Phillips
Annie Phillips
12:35 10 Oct 21
Turn around time was amazing on the project I needed done. When you don’t understand all the different forms... communication is key and you will get that here. They are there to explain what and why you need more
Meru Kapadia
Meru Kapadia
23:33 01 Oct 21
I usually don't write reviews much as everyone has different experiences, but definitely wanted to share the positive... experience I have had here and why I would recommend them to all my family, friends and co-workers.I got a referral for here from a friend, so thought of giving them a try over my old CPA firm. I have been going here for a couple years now and have to say they are top notch. They are always responsive and willing to work with me even when I am delayed. I generally like to ask a lot of questions and not once did I feel like they were annoyed by it and would very thoroughly and positively answer all my concerns with detail explanations. Even during the pandemic, they worked with me 100% virtual and it was seamless. Overall, I am very happy with this firm and will continue with them for the foreseeable more
Kevan Shah
Kevan Shah
21:45 01 Oct 21
I’ve been going to them for 3 years now for multiple of my businesses. I changed to them after I had problems with my... previous CPA firm and I’m so glad I did! Best decision I ever made for my businesses. They have saved me thousands of dollars over the years as well as deal with my immensely complicated tax filling issues. No matter when I call, they always help answer all my questions (and trust me I have a lot) and put my mind at ease on all my concerns. I feel as if I am family the way they take care of me. The quality of their work has not changed; very consistent and professional. It is an understatement when I say I highly recommend more
Maunil Shah
Maunil Shah
16:19 01 Oct 21
AKIF CPA is the best place for your tax needs! Saim has been easily available for my all my questions and concerns. ... Couldn’t ask for a better firm that provides excellent service and a familiarity with their clients. I always recommend family and friends to AKIF CPA!!read more
Shah Hussain
Shah Hussain
03:58 01 Oct 21
Hello AKIF CPA,I wanted to share my experience with you, your team and whomever may be reading this message. My most... humble thanks to you and your team for a being such great part of my success.You have done a fabulous job for us this year, and since you took over our books (during our most devastating times) you have literally taken weight off of our shoulders.Thanks for bringing everything up to date and also providing us with numbers or as you call it consultations, ahead of time so we could seal the holes.Great work!!!Shah more
Sumit Dalwadi
Sumit Dalwadi
04:57 30 Sep 21
The professionals at Akif have been absolutely amazing! Quick to answer all the questions I had and always available... to offer their more
Calvin R
Calvin R
20:21 29 Sep 21
I recommend these guys! I will be going back next year. They made everything simple and we understood what was... happening. There we issues with our taxes due to our previous accountant and these guys fixed everything. They answered our questions and service was always with a more
Ammoria Daniels
Ammoria Daniels
02:11 16 Sep 21
We contacted Akif with an urgent matter regarding corporate taxes. Akif immediately understood what was needed and... within days had everything ready to sign. The level of service we received was amazing and unmatched. Waqar expertise in trucking industry made our situation seamless. His communication was outstanding; I heard from him daily and could have been completed sooner if I was as fast as he was 😃 Highly recommended!read more
Joe Paneitz
Joe Paneitz
18:30 18 Aug 21
What an absolute pleasure to work with this CPA firm. My business is already seeing such a positive impact and growth.... I cannot believe I didn't connect with them sooner. This firm is helping in so many ways! 5 stars is an understatement! Thank you so much for your help AKIF CPAread more
Helptest ARCpoint Labs
Helptest ARCpoint Labs
15:02 18 Aug 21
The firm is quick, responsive, and has the latest technological software. Thus far, I have been with them for 3+ years... and will continue to work with them even after relocating. They make it easy even when I'm miles away. Would highly recommend more
Luz Tipaz
Luz Tipaz
16:06 13 Jul 21
Saim and his team are the best CPAs in town. I have been their client for years. All started when I needed help with... company structure with multiple companies and then accounting and Taxes. I have been very happy ever since. Thank you AKIF more
Maria perez
Maria perez
18:31 08 Jun 21
Me and my husband have been getting all of our personal Taxes, business Taxes, monthly bookkeeping, accounting and... payroll done with AKIF CPA. Recently, we had more stuff come up and had detailed analysis done on capital gains, single family rentals (SFR) and business disposition. You will only know how great this CPA company is until you have worked with them and given them a chance. Words can’t describe our experience. AKIF CPA gets the job done every time - very reliable, professional and more
Afnaan Amin
Afnaan Amin
22:14 02 Jun 21
Very good experience, we had unique situation in regards to cross border income as Canadians currently residing in the... US. Income on both sides of the border through completely different channels. Everything was very easy and completed timely, I also had lots of random questions and Mohammad provided top notch service along the way and even after we finished our taxes!! Highly more
Ryan Paton
Ryan Paton
10:56 08 May 21
I moved to the USA from Canada late 2018 as part of a promotion/relocation for work. For my 2019 returns, I used an... accounting firm recommended by the local Canadian social club in my city, which was a terrible experience. They were slow to respond to inquiries and would follow up in piecemeal requests which dragged out my return process over several months, often asking for information I had already provided.For the price I paid, I vowed to find better service. I found Mohammad online and decided to reach out. Mohammad was extremely responsive, took care of my US and Canadian returns as well as my wife's business returns in a timely manner. Overall, it was a very positive experience and I would recommend him to another in my more
Tuan Vo
Tuan Vo
01:59 20 Apr 21
I relocated to Texas from Alberta, Canada and needed a CPA to help me with my cross-border taxes as I was not happy... with the CPA that I used previously. During my interviewing process to find another CPA, I had good feedback from Mohammad as he was able to answer my questions regarding my unique tax situation with expertise, and importantly to me, in a timely manner. I decided to use his services for the current tax year and I have nothing but compliments for the work Mohammad provided. If you are in need of a professional cross-border CPA, I highly recommend reaching out to Mohammad more
See All Reviews

Crypto Tax & Accounting Newsletter Signup


Cross-Border Tax Newsletter Signup