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Updated on March 6, 2023
An audit trail refers to the step-by-step records by which accounting data can be traced to a source. Accounting entries, sources of funds, and trades can be validated through the use of an audit trail.
When businesses maintain an up-to-date and comprehensive audit trail (sometimes referred to as audit logs) it can help spot irregularities and prevent fraudulent activity, both within and outside of an organization. Many well-run accounting systems have an audit trail in place to keep track of all transactions, which makes it easy for internal bookkeepers or external auditors to access, when necessary.
Audit trails in the context of HR software usually refer to a log or a report that details: any changes or actions made within that system, the user who initiated the event, and when each action took place. For example, employers may use this information to confirm who may have changed an employee’s direct deposit information, entered time on a timecard, or changed a system setting.
“Since we received an IRS letter we’ve been organizing our documents so they have a straightforward audit trail.”
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