Is your church “audit-ready”?

“Audit-ready” doesn’t mean perfect—it means prepared.

In our experience pastors aren’t trying to hide financial information or get ‘around’ CRA. They just want their books to be accurate, their people paid properly, and their board to stop asking awkward questions at every meeting.

Churches—especially smaller ones—are often one CRA letter away from panic. Not because they’ve done something shady, but because they’re not sure what they’d do if someone actually asked to “see the books.”

The good news is you don’t need a CPA or a 300-page policy manual to be audit-ready. You just need a few consistent habits and simple systems that give clarity, not chaos.

✅ The 5 Habits of an Audit-Ready Church

1. Payroll is done correctly

Churches often have difficulty with proper payroll calculations and remittance.  Clergy compensation is unique.

• If your pastor has a housing allowance, make sure it’s calculated properly (see our article, “Understanding the Clergy Housing Deduction”).

• Make sure a backup showing how you arrived at payroll calculations, is easily available. This can be an excel spreadsheet, payroll software reports, copies of T1213 forms etc. 

2. Track Designated Giving Separately

If someone gives to “missions” or “building fund,” you can’t treat it like general donations. Mix-ups here raise red flags.

Use your accounting software (or a spreadsheet at minimum) to:

• Set up separate accounts for restricted funds.

• Show clear movements in and out of each fund.

• Match reports to donor intentions.

3. Reconcile Every Month—Not Just at Year-End

Many churches only check their numbers once a year. That’s like only checking your speed after the cop pulls you over.

Each month, review:

• Bank & credit card statements & reconciliations (all accounts)

• Payroll reports

• Monthly Balance Sheet and Profit and Loss statements

4. Keep a Digital Paper Trail

Lost receipts and undocumented expenses are audit fuel. Make sure:

• Every payment has a matching receipt or invoice.

• Documents are saved in a folder or better yet, in your accounting software as an attachment.

• Approvals (if required) are timestamped or emailed.

5. Understand Your Role (and Limits)

As a pastor, you don't need to be an accountant. But you do need to know:

• What you’re signing.

• What reports mean.

• When to ask for help.

You are the steward of your church’s finances—even if someone else does the books.

Final Word: Audit-Ready = Peace of Mind

Being “audit-ready” isn’t about fear—it’s about freedom.
It’s the freedom to focus on people instead of paperwork, knowing your financial house is in order.

Whether the CRA calls or your board asks tough questions, you can answer with calm confidence:
"Yes, we’re ready."

Need help getting there?
That’s what we do—church bookkeeping that’s simple, smart, and stress-free.