Why a Good Audit Trail is Important

The latest trend in government is all about transparency—and the embrace of innovative technology by government is making it easier than ever to provide transparency simply, efficiently, and accurately.

It can, however, leave your agency exposed to the public, and they may have questions when looking at your budget and books. In this scenario, a good audit trail is essential because it can save your agency time, preserve its reputation, and minimize errors.

The concept is simple: changes to accounting records should be documented and saved for future reference. Software, such as the governmental accounting software offered by BMS, makes this process straightforward. An audit trail will help you log, maintain, and monitor your accounting processes to protect yourself and your agency from fraud, fines for non-compliance, and potential funding issues.


Audit trails are fundamental in detecting possible fraud through internal controls. For example, internal controls can be used to divide the check signing, printing, and redemption processes by department. The audit trail will then monitor and record each step (who does what and when). This makes it easier to spot fishy changes to the ledger or unusual vendor activity that could be indicative of potential fraud before it becomes a serious issue.

Regulatory Compliance 

For regulated industries, an audit trail can show an agency’s willingness to comply with and meet regulatory standards. Purchasing contracts, vendor selection, proper accounting practices, ACA and labor practice compliance are just a few areas in which a good audit trail reflects your agency’s ability to follow the rules and will help avoid costly fines.


In the public and non-profit sectors, audit trails can help when agencies apply for funding or grants because they demonstrate financial cohesion and exemplify due diligence when recording data.

It is easy to assume that all accounting software includes audit trail functionality, but that is simply not the case, even among widely distributed, commercially available options (especially in low-cost systems). Even if audit trails are included in your software, they may not be robust enough for your organization. When choosing a software vendor, it is important to consider how the audit trail is recorded and managed to help your agency prevent fraud, ensure regulatory compliance, and improve chances for future funding.

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