Definition
An audit trail is a chronological, tamper-resistant record of every action taken on accounting data: who created, edited, posted, reversed or deleted what, when, from where, and which values changed. It lets an auditor follow any figure in the financial statements back to the source entry and the person responsible for it.
How it works
A useful audit trail answers five questions for every change: who, what, when, where (IP address or API key) and how (old value and new value). It must be complete, written automatically by the system and impossible for normal users to edit or delete.
The audit trail works together with posting rules. If posted entries can be silently edited, the ledger loses its history. In Ledgeriano posted entries are immutable and corrections go through linked reversal entries, while the audit log stores the action, the user or API key, the IP address, the browser, the time and the changed fields with old and new values.
Auditors use the trail to test controls, for example whether entries were posted after a lock date or approved by someone other than the preparer. Tax authorities in many countries also require that accounting software keeps an unalterable log.
Example: tracing a changed invoice
During an audit, a 12,400 sale looks unusual. The audit trail shows it was created as a draft for 14,200 by a sales clerk on 3 March, edited to 12,400 by the same user an hour later, and posted by the finance manager on 4 March from the office IP address. The auditor can confirm the change before posting and who approved it.