Audit Trail can be referred to as a securely relevant and chronologically arranged set of records that can provide documentary evidence of the sequence of activities that have taken place within the company, pertaining to financial transactions, or transactions that might be material for other purposes and circumstances.
Audit Trail can be best referred to as a paper, or an electronically based document that covers and entails the overall transactions that occur within an organization.
The main rationale behind this document is to provide the auditor with a plausible way to trace transactions from the general ledger to the original document. In other words, this provides an entire proof behind the occurrence of a certain transaction and the fact that it actually did take place.
Therefore, the Audit Trail is created to trace the transaction, and ensure that the audit assertion behind occurrence has actually been taken due care of.
Process of Audit Trail Creation:
Given the overall secrecy and importance of this particular document, it should ideally be accessed in a privileged mode, and therefore, should not be easily accessible by just anyone in the company.
Therefore, a role-based security model is mostly adopted in case of audit trails, so that these records cannot be tweaked or changed by users within the company.
Additionally, it can also be seen that creation, and subsequent presentation of the Audit Trail is proof of the fact that the firm has superior controls in place, and these controls can then subsequently be used in order to form the basis of objectivity within the audit.
Speaking of the overall Audit Trail process, it can be seen that it includes events presented in a chronological manner, which reflects the steps that were taken in order to bring a transaction from initiation to subsequent completion.
Depending on the nature of the transaction itself, the trail can be fairly simple, or it can be incredibly complex to follow. The initiation part of the audit trail is mostly the receipt of a certain invoice and is completed with proper proof (in most cases, electronically generated payment slips or checks) of payment.
From a company’s perspective, it can be seen that Audit Trails can be an excellent source of data management. This can be used for purposes of financial checks and controls.
Furthermore, from an auditor’s perspective, this respective documentation is a clear indication of transactions within the company being carried out in a seamless manner, with all fairness and honesty. This directly relates to the presence of internal controls and record-keeping within the organization.
Therefore, it can be seen that Audit Trail is an exceptionally important piece of documentation within the company, that is equally useful for both, the management, as well as the auditors.
However, the overall extent to which benefits and usefulness can be extrapolated from this series of events is directly equivalent to existing security systems presented within the organizations, that can mitigate the overall risk of these records being tweaked, or changed in order to cover up a certain transaction, or hide a possible fraud.