A revenue audit tests whether the income you reported is the income you actually earned. It is commissioned where revenue is hard to verify from the outside — cash businesses, high transaction volumes, commission arrangements, franchises and revenue-share contracts — and it is as often about control weakness as about deliberate loss.
Why businesses commission one
- Suspected leakage. Margins that do not match volumes, or takings that vary by shift without explanation.
- Franchise or licence royalties. Where a percentage of a franchisee’s reported revenue is due to you.
- Revenue-share and commission contracts. Verifying what a partner reported.
- Pre-sale or investment diligence. A buyer testing whether reported revenue is real and recurring.
- Landlord turnover rent. Retail leases with a percentage-of-sales component.
- Tax exposure. Under-reported revenue is a corporate tax and VAT problem before it is anything else — and a turnover mismatch is a documented FTA trigger.
How we test revenue
The principle is simple: reconcile what the systems say to what independent evidence says, in both directions.
- Completeness testing. Start from source — delivery notes, POS logs, booking systems, gate counts — and trace forward to invoices and the ledger. Testing only from the ledger finds errors in what was recorded, never what was omitted.
- Cut-off. Revenue recognised in the right period, matched to when the service was delivered rather than when the invoice was raised.
- Cash controls. Segregation of duties between taking, recording and banking. In small teams this is often impossible — the answer is compensating controls, not pretending otherwise.
- Discounts, voids and refunds. The most common route for revenue to disappear. Who can authorise one, and is it evidenced?
- Analytical review. Margin by product, revenue per staff hour, takings by day and shift. Outliers direct where to look.
- Third-party reconciliation. Payment processor settlements, aggregator statements, franchisee returns.
Most revenue audits do not uncover theft. They uncover a control gap that makes loss possible and detection unlikely — which is more useful, because it is fixable.
Where the risk concentrates
Retail and F&B with cash takings. Transport and logistics with driver-collected payments. Healthcare and clinics with insurance and self-pay mixes. Events and hospitality with variable pricing. Trading businesses with high volumes and manual discount authority.
The common thread is not the sector but the combination of volume, discretion and weak segregation.
What you get
A report setting out what was tested and on what sample, the reconciliations performed, the exceptions found and quantified where possible, the control weaknesses behind them, and prioritised recommendations. Where we cannot quantify a loss we say so rather than estimating — an unsupported number is worse than an honest gap.
Revenue audit sits outside the statutory annual audit, though findings often feed into it and into internal audit programmes.
Frequently asked questions
What is a revenue audit?
An examination testing whether reported income matches income actually earned, by reconciling operational records to accounting records and independent third-party evidence.
How is it different from a statutory audit?
A statutory audit gives an opinion on the whole financial statements. A revenue audit goes deep on one number, usually because there is a specific concern or a contractual reason to verify it.
When should we commission one?
When margins do not match volumes, before buying or selling a business, where royalties or revenue share depend on reported figures, or where cash handling has weak segregation.
Will it identify theft?
Sometimes. More often it identifies the control weakness that makes loss possible and detection unlikely, which is the fixable problem.
Does it affect our tax position?
It can. Under-reported revenue is a corporate tax and VAT exposure, and correcting it proactively through voluntary disclosure normally costs less than being assessed.
How long does it take?
Typically one to three weeks depending on transaction volume and how much of the source data is available electronically.
Can you audit a franchisee’s reported revenue?
Yes, where your agreement gives audit rights. We work to the scope in the contract.