Auditing is a complex process that can involve investigators from both inside and outside a firm looking for the proverbial needle in a haystack.
Automation of corporate operations has made auditing easier insofar as it keeps information more accurate, more readily accessible and more usable, at the same time that it vastly expands the scope and the amount of the data that is collected, potentially making an auditor’s job more difficult.
This post sums up the most important features of an audit trail, their importance for modern business and the ways your organization can leverage technological solutions to audit problems.
Q: What is an audit trail, and why is it important?
A: An audit trail comprises the records, both physical and electronic, that chronologically catalog events and procedures, document history, authenticate security and operational actions, and minimize challenges. At its most basic level, every business needs an audit trail of its financial transactions, which includes accounts receivable, accounts payable, invoices and purchase orders.
In other words, audit trails comprise what was once referred to as the “paper trail” of business, although these days it includes more and more records that are paperless, as opposed to the ones that will receive physical documentation. Within the scope of automated systems, auditing can be differentiated from logging, in that the latter has to do with program-level events and will be analyzed and handled on the programming end, while audits most often refer to user-level transactions recorded in the program.
Q: What kind of information does an audit trail contain?
A: Audit trails contain all the relevant details associated with a transaction, from the time, date and user information associated with the transaction to the more detailed financial data and reporting information an auditor may need. Records need to be kept for all of the automated events scheduled through an organization’s system, while keeping special records for the detection of unusual or abnormal use, application failures, unauthorized access, and other problem events for reporting and solutions.
Q: How long should audit trails be maintained?
A: Thorough audit logs should always be kept during the active life of a record, and, depending on the needs of a business and the possible requirements of the regulating authorities, for varying amounts of time afterwards. While keeping backlogs of data used to present a difficult and cumbersome problem for many organizations, the advent of Cloud computing has made it easier for firms to preserve data in a form accessible to audit for a long time afterwards, which can be extremely useful in historical reporting or problem-solving for the future. Audit committees will usually define a period of review, such as annually or bi-annually, that makes sense given the business cycle and regulatory needs.
Q: Who uses an audit trail?
A: Audit trails are most commonly managed by staff within the IT department, such as security managers and network administrators. These and other users of the system, including managers, employees, end-users, legal staff, accountants and anyone else who touches an electronic record to read or edit it, will be included in the audit trail. While audit trails are ultimately kept for the sake of internal and external auditors, a lot of the contemporary science of auditing involves trying to identify and catch up with problems before an auditor needs to be brought in.
Q: What are the benefits of keeping thorough audit trails?
A: The ability to follow records from their origins through their many permutations offers a number of benefits, including transparency and defense of records for compliance, record integrity and accuracy, protection of the system from misuse and harm, and the security of sensitive and vital information. Automated auditing logs do this work by holding individual users accountable for their interactions with a record, reconstructing the events that happen in its life, detecting intrusions and suspicious behavior, and identifying system implementation issues and system/operator errors.
Q: What common features does entity management software offer for auditing?
A: Entity management methods apply at every step of the process of creating and maintaining an audit trail. These steps need to include:
- Storage of transactions and documents by unique serial numbers.
- Check-in/check-out of content creation and editing.
- Simple adding and editing of permissions.
- Locking to allow simultaneous editing.
- Version control over the various previous iterations of a file.
- Tracking creation and editing — i.e., who did what to which file?
- Rollback to previous versions of a document.
Blueprint OneWorld’s data and document software offers a number of secure, elegant and affordable solutions to many of the problems discussed above. Our data management tracks all your firm’s data and accurately records the changes to it for auditing and reporting purposes. Our system also can relieve you of many of the headaches of legal compliance through automated creation, checking and filing of statutory forms in a number of different frameworks.
We hope to be your organization’s first entry point into a reliable and effective strategy of document management. Please call or email us today to discuss these and other solutions.