Small Business Success: Avoiding a QST Audit with Proper Bookkeeping

A small Montreal business narrowly avoided a full QST audit thanks to proactive bookkeeping cleanup and timely intervention. What started as a simple verification request from Revenu Québec could have easily escalated into penalties, reassessments, and months of stress but instead, it turned into a compliance success story.

This case study shows how proper bookkeeping, clean documentation, and CPA oversight prevented a potentially costly QST audit.

The Warning Signs

Revenu Québec sent the business a verification notice after noticing:
• irregular GST/QST filing patterns
• inconsistent refund claims
• mismatched monthly sales totals
• bank deposits that didn’t align with reported revenue
• missing or late-filed returns

These issues commonly trigger reviews and audits for small businesses.

The notice requested:
• sales summaries
• bank statements
• invoices and receipts
• ITC/ITR schedules
• merchant processor reports (Square, Stripe, PayPal)

The owner panicked documents were missing and bookkeeping was months behind.

The Underlying Problems Mackisen Identified

During the initial review, Mackisen discovered:
• duplicated transactions in accounting software
• incorrect tax coding for GST/QST
• missing supplier invoices
• personal expenses mixed with business transactions
• POS readings not reconciled to daily deposits
• digital receipts not downloaded for SaaS and recurring tools

Without fixing these issues, the verification would likely escalate into a QST audit.

How Mackisen Prevented the Audit

Step 1 — Reconstructing Bookkeeping

The team completed a rapid, detailed cleanup:
• reconciled every bank and credit card account
• recategorized personal vs. business expenses
• corrected tax codes
• matched deposits to invoices
• identified and removed duplicates

This immediately improved the business’s financial accuracy.

Step 2 — Rebuilding Documentation

Mackisen obtained:
• duplicate supplier invoices
• digital receipts for software subscriptions
• missing contracts and statements of work

All documentation was organized into folders aligned with QST filing requirements.

Step 3 — Preparing a Clean Verification Package

The CPA team assembled:
• a complete ITC/ITR support schedule
• detailed reconciliation explaining all deposits
• corrected sales totals
• organized proof-of-payment packages
• a professional explanation letter

This level of clarity reassured Revenu Québec that the business was compliant.

Step 4 — Communicating With the Auditor

Mackisen:
• submitted documents promptly
• answered questions professionally
• clarified discrepancies
• demonstrated corrective measures

The auditor was satisfied early in the process preventing escalation.

The Outcome

The verification closed with:
• no adjustments
• no penalties
• no further audit
• refunds released
• account restored to good standing

The business avoided what could have become a stressful, invasive QST audit.

Key Lessons

• Clean bookkeeping prevents audits and penalties
• POS and bank entries must be reconciled regularly
• Document organization is crucial for ITR/ITC claims
• Small errors accumulate and attract attention from Revenu Québec
• Prompt, professional communication changes outcomes

Real Client Quote

“Mackisen saved us from a nightmare. They cleaned everything and handled Revenu Québec so quickly that the audit never happened.”

Common Questions

What usually triggers a QST audit?
Inconsistent sales reporting, missing documents, and irregular refund patterns.

Can bad bookkeeping really cause an audit?
Yes, most audits begin with poor recordkeeping.

Is it possible to stop an audit before it starts?
Clean documentation and CPA intervention work.

Do small businesses get audited often?
Yes especially in retail, services, and e-commerce.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps small businesses maintain audit-ready books, respond to verification notices, and prevent routine reviews from turning into full audits.