The study examined the relationship between audit practices and financial performance of small and medium enterprises (SMEs) in Wakiso District, Uganda. A cross-sectional survey design was employed with a sample of 170 SMEs selected through stratified random sampling. Data were collected using structured questionnaires and analyzed through descriptive statistics, Pearson correlation, and regression analysis. Results revealed that audit practices had a significant positive relationship with financial performance (r = 0.728, p < 0.01), explaining 53.0% of variance. Specifically, internal audit practices (r = 0.681, p < 0.01), external audit practices (r = 0.656, p < 0.01), audit independence (r = 0.639, p < 0.01), and audit recommendations implementation (r = 0.672, p < 0.01) all demonstrated strong positive relationships with financial performance. The study concluded that effective audit practices significantly enhanced SME profitability, operational efficiency, and financial transparency. Recommendations included establishing internal audit functions, engaging qualified external auditors regularly, ensuring audit independence, implementing audit recommendations promptly, and developing affordable audit service models tailored to SME resource constraints.