What is auditing in accounting?
Auditing is the independent examination of a business's financial records to verify their accuracy, completeness, and compliance with relevant laws and accounting standards. An auditor — internal or external — reviews financial statements, accounting records, and supporting documentation and provides a professional opinion on whether the accounts present a true and fair view. For Perth businesses, consistent audits enable financial openness, stakeholder confidence, and early detection of irregularities.
Why is financial transparency important for a business?
Financial transparency means disclosing your organisation's financial activity honestly and completely. This openness builds trust with clients, vendors, creditors, and investors. Key benefits include:
- Stakeholder confidence — audited reports assure investors and lenders that the business is financially reliable
- Informed decisions — verified records give owners accurate data to plan growth and manage cash flow
- Error and fraud prevention — clear, independently checked records make it easier to detect irregularities early
- Lender and investor access — banks and investors often require audited financials before extending credit or capital
What types of audits apply to Australian businesses?
- Internal audits — review organisational procedures, controls, and risk management
- Compliance audits — verify adherence to taxation law, employment legislation, and industry regulations
- Financial reporting audits — independent third-party verification of financial statements for stakeholders
- ATO audits — review of tax returns, GST/BAS lodgements, and superannuation compliance
- SMSF audits — mandatory annual audit of Self-Managed Super Funds by an ATO-approved auditor
What does the ATO audit?
The ATO may audit a business's income tax returns, GST and BAS lodgements, PAYG withholding, superannuation compliance, and expense claims. The ATO uses data matching — comparing lodgements against bank data, industry benchmarks, and third-party reports — to identify businesses for review. Businesses that deviate significantly from industry norms or have inconsistent reporting histories attract more attention.
How can Perth businesses prepare for an ATO audit?
- Maintain reconciled financial records and accounts throughout the year
- Lodge all required filings (BAS, tax returns, STP) on time
- Ensure your tax submissions align with your accounting records in Xero
- Store all source documents (invoices, receipts, bank statements, contracts) for at least five years
- Use cloud accounting software for a clear, timestamped audit trail
- Engage a registered accountant or tax agent who can represent you if the ATO makes contact
What is an audit-ready checklist for Australian businesses?
- All bank accounts and credit cards reconciled in Xero
- All mandatory filings lodged on time with no outstanding notices from the ATO
- Tax submissions consistent with accounting data
- All source documents filed and accessible (digital storage preferred)
- Internal controls in place for expense approval and payroll
- Annual review of financial records with your accountant completed
The Metier Group provides audit preparation support and financial health reviews for Perth businesses. Contact us to ensure your records are always audit-ready.