If you remember anything from the 1996 film ‘Jerry Maguire’ it’s probably the infamous Cuba Gooding “Show me the money!” line. The line might just as easily have been said about bookkeeping because keeping an accurate financial trail of transactions is a bookkeeper’s most important task. Whether you work for a company or are contracted out for tax season, it’s important to note that creating an audit trail is necessary because if you are audited, you’ll want to be able to give the auditor a clear picture of what’s going in and how much is going out. This helps give the auditor confidence in the company they’re looking into.

So what does a proper audit trail look like?

If the CRA notifies you that they will be conducting an audit the first thing they’ll want to see is a substantial record of the businesses’ income as well as its expenses. Errors in this step are usually the first sign of trouble. The best way to avoid errors is to ensure that the business uses its bank account to pay all of its expenses. If they pay directly through a bank, the bank will have accurate, error free records of funds going in and out. But if the business pays cash and doesn’t keep accurate receipts, your task as a bookkeeper preparing for an audit just got a whole lot more complicated. That’s why it’s important that the business you work at or are contracted to keeps track of its transactions. Remember, it’s a lot easier to fix mistakes by ensuring they don’t happen rather than trying to fix them after the fact. Sheri Gulston, accounting officer at Ashton College in Vancouver BC, says that “the goal with creating an audit trail is that anyone can step in and get an accurate view of the financial stability of a company. That’s why keeping accurate records is so crucial.”

When keeping receipts it’s not enough to just collect them in one place and expect the auditor to collate them for you. What you’ll need to do is ensure that the receipts are numbered and that each number corresponds to a transaction. This is similar to the classic double-ledger system of bookkeeping which has been in place for hundreds of years. And there’s a very simple reason for it: it works. When auditors are combing through the financial records of a business they’re looking for what they call “completeness” and by using numbered receipts that correspond with transactions they’re able to get a big picture view of how that business operates.

Lastly, whether you’re a bookkeeper on contract or permanently attached to a company it’s important that you cross-train. No, that doesn’t mean doing cardio in the office but you do need to ensure that other people in the company are familiar with and understand how to keep track of their own receipts. For instance, if the company has an employee expense account you need to make sure that on a business trip, employees keep track of their purchases and hold on to their receipts. Because when the trip is over and they return back to work errors made in reimbursing them can cause foul ups during an audit.

Just remember, no one likes being audited. But if you keep accurate, up to date financial records there’s no reason the process has to be painful.