What is an Audit Trail?

An audit trail is a record marked with date and time that captures the history and specifics of a transaction, work occurrence, product development phase, control action, or financial ledger entry. Nearly any kind of work activity or procedure can be recorded in an audit trail, regardless of whether it is automated or manual. Various domains will possess audit trails that appear in multiple formats to reflect their specific areas of emphasis, yet the common theme and goal of the audit trail is to monitor a series of events and actions in sequential order. In the current swift IT and risk landscape, having access to an audit trail or audit log in real-time or as close to it as feasible could be integral to an organization's daily functions.

In the context of healthcare and medical devices, an audit trail would monitor access and authentication to a patient's medical records (usually found in an Electronic Health Record or EHR), document any modifications made, and indicate when that sensitive information was accessed. In the financial industry, organizations such as the SEC and NYSE will utilize an audit trail to reveal and examine specific details on trades when there are concerns regarding the accuracy, legality, or legitimacy of trade information. The majority of information technology systems include a comprehensive audit trail for user actions, and certain IT systems are designed to collect inputs from other systems and generate audit trail data from them.

Main Purpose of Audit Trail

Businesses must keep a thorough and complete audit trail to trace any irregularities and identify process failures when they occur. A secure audit trail assists companies in detecting internal fraud by monitoring the various users and their activities related to a company's data and information.

Audit trail logs can assist in pinpointing external data breach problems. The increasing prevalence of malware and ransomware offenses highlights the importance of an audit trail, which can assist in detecting and signaling instances of external threats, while also enhancing your organization's information security measures.

Audit trails are necessary for companies to meet compliance in various areas, and all publicly-traded firms need ongoing audit trails due to the Sarbanes-Oxley Act, which mandates an annual audit conducted by independent external auditors.

Each step of a financial transaction is logged with a timestamp that shows the seller, buyer, time of the transaction, and sale location, creating an audit trail that captures important information about transactions and procedures for future examination. Similarly, having internal transactions and processes monitored by an automated audit trail simplifies root cause analysis and investigations significantly.