Even though many people do not realize this, audit trails play an incredibly crucial role in running a business successfully. The basic concept of audit trails is to identify an issue as early as possible so as to avoid serious situations like cyber-attacks, data corruption, security breaches and so on. For this, all the necessary information is recorded in a detailed manner.

To make it a success, every single personnel affected by it should be on the same page, be it the upper management, IT department, or the accounting section. More detailed and comprehensive the report is, better will be the results.

In this article, we help you understand what an audit trail is and how it works and its benefits. 

What is an Audit Trail?

An audit trail is a record that catalogs all the events and procedures, in chronological order, that takes place in a company. This piece of information is used to provide documentation support and history behind the incidents, which aids in authenticating security and operational actions and even mitigating certain challenges. This report can be prepared either manually or electronically.

Such audit trails are the source of proof when it comes to compliance and operational integrity. Furthermore, it helps in identifying the reasons for non-compliance, thus helping you make the necessary changes in the system to accommodate a feature.

With the audit trails now made electronically/digitally, the IT department plays a crucial role in maintaining the trail. Even though the IT sector has its own set of complicated log processes to monitor the numerous activities of users, systems and applications, it does use the audit trail for validation purposes as well.

One important thing to understand at this juncture is the difference between auditing and logging. While logging revolves around the technical side of things that help in debugging software issues, auditing talks more about the user-centric things like a financial transaction done by a user at a particular time. As a result, most companies now prefer having two different logs for both these purposes, whenever possible.

What is included in an Audit Trail?

An audit trail is there to provide the necessary information that can be used to back-track the whole line of events up to the creation of the event. User activities, access to data, login data, login attempts and automated system activities are just some of the many things that are included in an audit trail. Basically, it should have the following three things:

• What the event was about
• The user, system or application that launched the event
• The data and time of the occurrence of the event

Apart from these three pieces of information, you can go for an even more in-depth audit trail to make it a more inclusive system. This way, you will be able to pinpoint a change in the database that led to a problem. Moreover, you can create multiple audit trails where the administrative and application-based transactions are monitored differently, to make it a robust system of audit trails.

How often should you review your Audit Trail?

There is no ideal time period in which you should perform reviews on your audit trail because it depends on the security needs of the company. It can vary from industry to industry and also depends on the kind of data used in the system. However, the ideal scenario will be to perform a review process at least once or twice a year. For this, you can set up an audit committee.

What are the industries where Audit Trail can be used?

Simply put, any industry that tracks records or transactions can benefit from an audit trail as each one of them needs to support compliance, operations and security in the best possible manner. Any company that uses transaction of confidential data electronically requires an audit trail, right from government agencies to educational institutions.

Some of the industries where audit trail can be used to improve efficiency are Health Information, Financial, accounting and billing records, Manufacturing Design Controls, Clinical Research Data, IT Helpdesk Records, E-commerce sales, Legal and Research Investigation, Nursing, Ballot-Keeping and Voting Records, etc.

What are the benefits of Audit Trail?

When it comes to the benefits of audit trail, there are many – transparency, security, defense of data and system protection to name a few. Here we have explained the benefits through these points.

User Accountability – It is incredibly important to track the work of a user within your system. Since they have access to your system in some or the other way, they can very well be the cause of the security breach. Therefore, audit trails come in handy as they log the actions of a user with their unique user identity. Since the user knows about this security net, he/she will be careful about using the system in the right manner. Moreover, such detailed tracking helps you pin-point the problem area quickly, thus helping you mitigate the risk with ease.

Reconstruction of events – Whenever there is an issue that crops up in the system,  the first questions by the IT investigation team revolves around the “when”, the “how” and the “what”. This is exactly what an audit trail provides and in turn, helps you prevent future events of the same manner. As a result, you can prevent hacking, system failures, outages and so on.

Detection of intrusions – Unauthorised access to the system is one of the biggest problems faced by most industries across the world. An audit trail finds such intrusions by identifying suspicious behavior by any of the users. However, this does not mean that the personal information of users is at risk, as all the official regulations and mandates are followed to maintain confidentiality.

Identification of other problems – Thanks to the automated system, you can identify any of the problems in real-time, be it an implementation error or an operational error.

In conclusion, we would say that an audit trail works as the basic parameter, based on which you can start the investigation for a discrepancy in your system. Furthermore, it can be used for reconciliation, forming historical reports, future planning related to budget or tax, risk management and system compliance.

With so many benefits, having automated audit trails in your company will help your business quite significantly. To know more about such financial automation software and cash-flow systems, get in touch with ClearCycle.