A step-by-step record used in accounting transactions and trades in brokerage accounts where accounting, trade details and other financial data is tracked to their source is called an audit trail. In simpler terms, an audit trail is a feature that creates a log with every change made in the account books and the date the change is made. This way companies can track modifications, deletions, and edits made to their books.
An auditor can gather in-depth information about any accounting activity from an audit trail—which improves accuracy and transparency in businesses.
Audit trails are beneficial as they provide an organized record that can be used to trace the very roots of financial data, thereby allowing one to verify the precision of said data and transactions.
They are relevant in many industries in ensuring accuracy and compliance in operations, thereby maintaining transparency in business.
Now that we have cleared what audit trails are, let us look into why they should be a crucial part of the accounting software for your business.
Why Are Audit Trails Crucial In Your Accounting Software?
Depending on the size, scale, culture and other deciding factors of your business, various organizations gain a range of benefits from audit trails. Some major benefits of audit trials are:
Prevention Of Fraudulent Practices
When there are proper records for every accounting move made, detecting discrepancies is made easy. Making your accounting team aware of the audit trail itself is bound to make fraud and malicious practices less frequent.
Even if you identify any discrepancy in your transactions, it is easier with the audit trail feature to get to the bottom of it. Not just for the management, audit trails can also be used by employees in case of any confusion or in the worst case scenario; a false accusation.
Let’s get real. Even if you have a small-scale business or a large one, auditing is a stressful task. But proper bookkeeping can help you to ease this burden to an extent.
If every transaction in your book has an audit trail, checking the validity of the transaction would be so much easier for the auditors. When auditors work faster, you save more money. This can be achieved with the help of an UK bookkeeping software which automatically maintains an audit trail of accounts and saves auditors time and money.
Not just saving money, a strong audit trail builds trust among auditors. On the other hand, a lack of audit trail will definitely raise suspicion which could even lead to a longer investigation.
Detection Of Intruders
Identity theft, duplication of intellectual property, and financial records are rampant today. In these cases, audit trails can be used as intrusion detection systems.
Intrusion detection is the process by which the system recognizes unauthorized access or intrusions. Many companies have made this obligatory to protect personal, financial, and intellectual data.
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If there is any damage found in the auditing process, the organization can identify how and when things went south with the help of audit trails. This information can also be used to prevent further damage in the future.
Key Features to Look for Audit Trail in Your Bookkeeping Software
As more and more businesses are relying on automated audit trails in their bookkeeping system to improve operational efficiency, one should be aware of the key features to look for in your UK bookkeeping software to have a strong audit trail.
Having the option of keeping user detail along with each edit log is crucial to keep a business transparent. Ensure that your UK bookkeeping software maintains record of every user who accesses your accounts and initiates any edit, alteration or deletion.
Sequence Of Records
In order to increase business efficiency, the software you are using should record the date and time logs of each transaction in detail.
Every log should have a date stamp. New regulations mandate that all the records and edits should be kept saved without the date stamps being disabled.
UK accounting software that keeps copies of user versions should be on the top of your list This will allow you to get a clearer picture and compare what changes were made and when.
If you are an entrepreneur who is serious about minimizing fraud and ensuring transparency in your business, investing in a UK bookkeeping software with an audit trail feature is definitely worth it. You can track your bookkeeping expenses and accounting transactions with ease and complete transparency, thereby making auditing easy for your auditors and internal teams.
Cloud-based bookkeeping software like Dext is an excellent choice to automate your audit trail and ensure bookkeeping details are recorded regardless of who logs them and when are they logged.