Why do you need Audit Trail

Audit trail is a consequential part of any industry or organization. It provides numerous benefits including accountability and transparency, improved decision making with valuable insights, fraud prevention, compliance with regulatory requirements, easier auditing and investigations, and assurance of data accuracy and integrity. Keeping an accurate audit trail is critical for any organization to maintain trust and confidence in their operations.

Audit trail is a detailed log of all the actions and changes made to a system or data in a business transaction. It offers a record of all operations and alterations performed to a system or set of data. For the purposes of regulatory compliance, including the observance of financial reporting and data protection regulations, this record may be used.

In addition to incident response and IT security, auditing and fraud detection are other uses for audit trail. Audit trails can be used to improve internal processes and controls and help businesses maintain transparency and accountability. In general, audit trails are crucial for ensuring the safety, dependability, and accuracy of a company’s data and systems.

Essentially, there are two types of audit trails:

1. Physical audit trails: Physical audit trails are manually created paper records of all system actions and modifications. Physical audit trails can serve as a permanent record of transactions, but their creation and upkeep can take a lot of effort, and they are also prone to loss or destruction. Due to this, audit trails of this kind are gradually becoming obsolete.
2. Electronic audit trails: Also known as system logs, these are created by the computer systems themselves, and record all changes made to the system, including user access, data input, and configuration changes.

Why Audit Trail is crucial

There are several use cases for audit trail like:

• Regulation adherence: Audit trails can be used to show that certain regulations have been followed. Organizations must maintain thorough records of all operations and modifications made to sensitive data and systems to comply with these rules.
• Financial reporting and auditing: For both internal and external audits, audit trails can offer a record of all financial transactions and operations. This can support businesses in their efforts to identify fraud, stop it, and guarantee the accuracy of financial records.
• Fraud investigation and detection: Audit trails can be utilized to spot unauthorized or suspected activity. Organizations can spot patterns or abnormalities that might point to fraud and conduct additional research by evaluating the audit trail.
• IT (Information Technology) security and incident response: Security breaches or other occurrences can be found and investigated using audit trails. IT security employees can identify the root cause of an incident and respond appropriately to stop it from happening again in the future by evaluating the audit trail.
• Enhancing internal procedures: Audit trails can be utilized to spot mistakes, inefficiencies, and chances for process improvement. Organizations can use it to determine where improvements are required and to guide their decisions with data.

Best Practices for Implementing an Audit Trail

If implemented properly, audit trail can serve as a valuable security instrument for organizations and businesses. Following are some best practices for an effective audit trail implementation:

• Identification of the crucial events and data that must be tracked: Prior to the implementation of an audit trail, it is crucial to make a list of the crucial events and data. This involves deciding which processes and modifications need to be documented and what information the audit trail should contain.
• Making the right technological choice for the audit trail: It is crucial to pick the right technology for the audit trail once the crucial data and events have been recognized. This could entail comparing various software or hardware options and choosing the one that best suits the organization’s requirements.
• Creating policies and processes for maintaining and evaluating the audit trail: To guarantee that the audit trail is efficient, it is critical to create policies and methods for doing both. This covers policies for setting up and archiving the audit trail and steps for examining the data.
• Ensuring the security and integrity of the audit trail data: It is critical to have security controls in place to preserve the data’s integrity and confidentiality if you want to be sure that the audit trail data is reliable and correct. Access restrictions, encryption, and regular backups are a few examples of this.
• Review and analyze the audit trail frequently: Reviewing and analyzing the audit trail frequently will help you gain insights and spot any unauthorized or questionable activity. This can entail spotting trends, anomalies, or patterns that might point to a security breach or compliance infraction.
• Staff should be educated on the value of audit trails. All employees need to be educated on the value of audit trails and how to use them successfully. This involves giving instructions on how to utilize the audit trail system and the guidelines for preserving and examining the audit trail.

Automated audit trail over manual audit trail

Automated audit trails, also known as electronic audit trails, have several advantages over manual audit trails:

• Efficiency: Computer systems create and automatically record audit trails that are automated. This saves time and resources by doing away with the necessity for manual recording.
• Comprehensiveness: Automated audit trails can log a greater range of activities and information, such as user access, data input, and configuration changes. Compared to manual audit trails, this may offer a more thorough record of the operations.
• Reliability: Compared to manual audit trails, which can be subject to human error, automated audit trails may be less likely to contain errors and omissions.
• Searchability: Electronic storage of automated audit trails makes them easily searchable and retrievable. When performing audits or investigations, this might be helpful.
• Real-time monitoring: Automated audit trails can offer real-time monitoring of system activity, which is helpful for identifying and responding to security issues or compliance violations.

Audit trails are a valuable tool for organizations to maintain transparency and accountability, and to ensure the integrity, security, and trustworthiness of their data and systems. But manually maintaining audit trail during the current time of technological disruption is the opposite of smart work. Integrate technology into your audit trail management system and optimize your business for security and value.

Download the ebook  to know how DigitalCFO integration will insure your business with automated audit trails for every event.