Facing an expense audit might seem overwhelming, but with the right approach, you can tackle it like a pro. In this article, we’ll guide you through the process of organizing your bank and credit card records to breeze through your expense audit.

Understanding the Requirements

When dealing with an expense audit, the key lies in having a comprehensive record of your financial transactions. This involves both your bank and credit card statements for the tax year under scrutiny. However, the audit’s scope goes a bit further:

December Statement Before Audit Year: This statement provides context for the year being audited.

January Statement After Audit Year: This statement helps confirm the transactions at the end of the audited period.

Step 1: Gather Statements

Start by collecting PDF copies of all your bank and credit card statements. Remember to include the December statement preceding the audit year and the January statement following the audited year. These statements serve as important references for auditors to track your financial activities.

Step 2: Download Transactions

For a comprehensive overview, download all your transactions over this 14-month period. This step ensures that auditors can scrutinize each expense thoroughly.

Step 3: Accurate Classification

A crucial aspect is properly categorizing your transactions. Ensure they’re classified correctly based on the nature of the expense. If you’ve been using accounting software like Quickbooks or Xero and have regularly reconciled your books with your bank and credit card statements, this process might be simplified.

Step 4: Accounting Software Advantage

If your books are up to date and reconciled, you might not need to download transactions. However, having your bank and credit card PDF statements is still important for reference.

Incorporating Quickbooks or Xero

If you’re already using accounting software like Quickbooks or Xero, you have an advantage. Regular reconciliation means your records are likely accurate, saving you the step of downloading transactions. But, as mentioned earlier, retain those PDF statements—they’re your audit safety net.

Conclusion: Facing Your Expense Audit Head-On

While expense audits can be stressful, having your records meticulously organized makes a world of difference. By ensuring you have the right bank and credit card statements, understanding the time scope, and accurately categorizing your transactions, you’re well-prepared to handle your expense audit. Whether you’re a spreadsheet guru or a software aficionado, these steps will help you face your audit with confidence and efficiency.


Kelly Coughlin, CPA
CEO, EveryDayCPA.com


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