Understand which kind of audit the CRA is doing
Not all CRA reviews are the same. A desk audit means the CRA reviews your file remotely without visiting your premises—they request documents by mail or online. A field audit means a CRA officer comes to your location and examines records on-site. A third type, the compliance review, is broader and may touch multiple years.
The letter from the CRA will specify which type. Desk audits typically focus on one year and specific line items. Field audits are more thorough and assume more risk. Compliance reviews may span two or three years and examine overall business practices.
Your accountant can contact the CRA before you respond to clarify the scope and determine what documentation is most critical to gather first.
Organize your records chronologically
The CRA wants to see that you can trace income and expenses back to source documents. For revenue, gather invoices, bank deposits, and sales records covering the audit year. For expenses, collect receipts, invoices from suppliers, bank statements showing payments, and credit card records.
Organize these by category—meals and travel, vehicle, supplies, rent, contractors—and then chronologically within each category. A spreadsheet linking expense receipts to your accounting entries is invaluable. It shows the CRA you have a system and weren’t pulling numbers from memory.
If you’ve been using cloud accounting with receipt capture, you’re already ahead. The CRA sees that you’re systematically recording transactions when they occur, not reconstructing them months later.
Be prepared to explain anomalies
The CRA will notice unusual patterns: a spike in vehicle expenses, round-number payments to a contractor, a personal withdrawal that looks like unrecorded income. Have a clear, calm explanation ready. For example:
This article is general information, not financial advice, and it may not reflect the latest rules or your own situation. Talk to Ledgerline Accounting about your circumstances before acting on it.