Audit trail

How do audit trails work?

Audit trails are detailed records that document every action within a system, from user logins to changes in data or configuration. In other words, they provide a chronological history of activity, giving organizations clear visibility into how their systems are used and by whom.

These trails are created through audit logs (i.e., automated entries containing key details, such as the user, time, and affected resources).

Audit log contents

A well-structured audit trail should contain clear, precise entries that, at minimum, capture the following details for each transaction:

• Date and time
• Accurate description
• Precise amount
• Who initiated and approved the transaction
• A thorough history of changes or updates made to the log

Furthermore, for an audit log to be effective, it must safeguard this information against unauthorized access or tampering via security controls, such as privileged access management (PAM) or role-based access control (RBAC). Random checks for accuracy and efficiency are also encouraged to ensure the log’s reliability

Implementing audit logs

Establishing audit logs requires several key factors that ultimately shape the final log’s design and use. For instance, the organization’s size and operational complexity should affect how extensive the log needs to be. Industry-specific regulations may also dictate particular requirements, especially in highly regulated sectors.

Finally, the organization’s available budget and resources should also be considered, as more nuanced systems and platforms may need greater setup and maintenance costs.

Audit log example

Based on a standard purchase order process, an efficient audit log of the following steps would capture each step’s date and time, who was involved, a description of what occurred, and the order’s status based on the step:

1. Employee A places an order for printer paper.
2. The purchase order goes to the office supplier.
3. The office supplier ships the requested boxes of paper and sends the company an invoice.
4. Employee A receives the shipment and enters the invoice in the company’s enterprise resource planning (ERP) system.
5. The system matches the entered invoice with the recorded purchase order.
6. Manager A approves the matched invoice for payment.
7. The company sends payment to the office supplier.

Audit trail benefits

Audit trails give organizations a clear, verifiable record of system activity, which, in turn, provides several benefits.

• Helps prevent fraud: Records of every action make unauthorized activity easier to spot, enabling quick detection of suspicious behavior and providing evidence for investigations.
• Supports efficient audits: Chronological logs allow auditors to verify transactions and trace changes quickly, saving time, reducing errors, and ensuring thorough reviews.
• Informs decision-making: Activity data reveals patterns, highlights bottlenecks, and supports workflow optimization, turning raw logs into actionable insights.
• Helps secure loans and investments: Transparent records of controls, transactions, and compliance build stakeholder confidence, facilitating funding and favorable financing.
• Supports regulatory and internal policy compliance: Detailed trails demonstrate consistent monitoring and adherence to regulations and internal policies, providing a defensible record for regulators and reducing risk.

Audit trail FAQs