What is an Audit Trail?

A good accounting system should by nature produce a clear audit trail for all documents and records that a third party could follow on inspection of the books.

Just as the accounting cycle starts with the supporting documents and ends with the prepared reports or financials- the balances reported on those financials should be able to be traced back from the ledger accounts right back through the accounting system to the original supporting documents or verification source.

An auditor or any third party should be able to trace each single transaction or ledger entry (General Journal) back through the system to the source - without your help by following the trail.

We accomplish this by using meaningful transaction notations, implementing a transaction coding system, utilizing non complaince logs and having a working records storage and retrieval system.