How a Good Audit Trail Can Save You!

T2014-10-03O-Nahere’s only one word scarier than “tax prep”: Audit. Regardless of how scary this word sounds, there are tools and processes available that can save you
from a truly nasty predicament. Those processes include a thorough and comprehensive audit trail.

Despite use of the word “trail”—which insinuates a long and lengthy process—the idea of an audit trail is actually very simplistic and feasible. Creating an
audit trail is as simple as:

1. Utilizing software that allows you to make notes on entries and changed accounting records

2. Logging the details of the change or record for future reference

3. Including in the audit trail details of who did what, when, how, and for how much, and

4. Having a way to query those details in the event of an audit

5. Regularly checking deleted, voided and changed records for error

Once you have an audit trail process in place, the most important part is the ability to maintain and monitor it properly. Proper maintenance and monitoring of the audit trail will not prevent future headaches in the event of an audit. A strong audit trail can actually help to prevent employee fraud, investigation by the IRS, funding rejections due to shoddy records, and compliance infractions identified by regulatory agencies.

All of these accounting misfortunes are prevented by establishing a proper audit trail, creating guidelines and procedures for using it, and having two or more designated parties checking it regularly. Utilizing software capable of audit trail functionality is a great place to start, but it is important to take other precautions for proper record keeping as well. An established authority should regularly review the list of users who can change records and record notes on the audit trail. Adhering to a schedule for checking deleted, voided and changed records will help to avoid potential fraud.

There are many good software companies that allow for audit trail functionality that records the date, time and user any time an accounting record is altered, but without the human component recording why the change took place, your audit trail lacks logic. It’s the combination of functional software and good recordkeeping that ultimately makes your audit trail complete.

Share This Post:

This entry was posted in Best Practices, BMS Products, Government Accounting Standards, Office Efficiency. Bookmark the permalink. Follow any comments here with the RSS feed for this post. Both comments and trackbacks are currently closed.