The Impact of Tariffs on the Audit Process
Why Tariffs Aren’t Just a Trade Issue — They’re an Audit Issue Too
Tariffs are often discussed in the context of politics, trade wars, and global economics. But there’s a side of tariffs that doesn’t make headlines — how they affect businesses at the ground level, particularly during an audit.
Whether you’re importing equipment, exporting resources, or simply sourcing components from overseas, tariffs can impact your financials in ways that demand close scrutiny. For auditors, they introduce new risks, more complex disclosures, and the need for greater professional judgment.
So how exactly do tariffs shape the audit process? Let’s break it down.
1. Tariffs Affect Cost of Goods — and Inventory Valuation
When tariffs increase the cost of imported materials, that change flows directly into inventory. Auditors will want to ensure that:
Inventory is valued correctly under IAS 2 or ASPE 3031.
Any sudden cost increases are accurately captured and allocated - including assessing all those future uncertainties.
Impairment is considered if tariffs make certain stock uneconomical or obsolete.
For companies operating in natural resources, where inputs like machinery or parts often cross borders, this can have a significant financial impact.
2. Risk of Errors in Duties, Taxes, and Payables
Tariffs can also introduce complexity in tax accruals, customs duties, and payable balances. From an audit standpoint, this increases the risk of:
Understated liabilities (missed or incorrectly calculated duties)
Non-compliance with trade regulations
Unrecorded contingent liabilities if there are unresolved tariff disputes or investigations
Auditors may need to test your customs processes or review correspondence with border agencies — a step not always needed in the past.
3. Transfer Pricing and Intercompany Transactions
For multinational groups, tariffs can influence transfer pricing. Companies may adjust their pricing models to minimize tariff impact — but that can raise red flags if not documented and justified properly.
Auditors must:
Review intercompany pricing policies
Assess compliance with tax and customs laws
Evaluate whether the group’s profit allocation still reflects substance over form
This adds pressure on both finance teams and audit firms to stay sharp on cross-border rules.
4. Disclosures in Financial Statements
Tariff exposure — especially when it’s material — may require disclosure in the notes to the financial statements. This includes:
Tariffs that materially impact profit margins or cash flow
Ongoing legal or regulatory matters related to trade
Strategic shifts (e.g. changing suppliers or halting certain imports)
Auditors need to evaluate whether:
Disclosures are complete and transparent
Judgments are clearly explained
Risks are communicated to users of the financials
For natural resources businesses with global supply chains, this isn’t theoretical — it’s essential.
What This Means for You
If your business is exposed to tariffs — directly or indirectly — now’s the time to:
Review your procurement and customs processes
Document judgments around inventory, pricing, and disclosures
Ensure your finance team is aligned with trade, legal, and operations
And if you're heading into an audit? Let your auditor know early. Transparency goes a long way.
How Black Maple Can Help
At Black Maple, we don’t just ask for documents — we ask the right questions. Our team understands how economic shifts like tariffs ripple through financial statements, and how to approach them with clarity and confidence.
We bring international audit experience, industry-specific knowledge, and a commitment to making audits more strategic and less stressful.
Closing Thought
Tariffs may be outside your control — but how you prepare for their impact isn’t. With the right audit partner, you can navigate the complexity, stay compliant, and maintain trust with your stakeholders.