posted on 06-06-2019

Audit Trail

Updated August 7, 2020

What is an Audit Trail?

An audit trail refers to the complete record of events that occurred in the execution of a transaction.

How Does an Audit Trail Work?

When a transaction is executed (e.g. a business purchase), each documented step taken makes up the audit trail. Depending on the transaction, the audit trail can be highly complex or very simple.

For instance, the audit trail for the purchase of a carton of milk would consist only of the receipt for the transaction. This receipt details the exchange of cash for the item purchased (milk), the date, and the institution where it occurred (the store).

Why Does an Audit Trail Matter?

The records comprised in an audit trail can be reviewed with diligence in the event that accounting figures fail to reconcile. Recreating a transaction step-by-step will reveal where a breakdown in the process occurred (if any).