An audit trail, in relation to accounting, is a record left by the accounting information system of movements in individual transaction data. This record, in the form of references to the processing of the data, provides a trail of the processing of transactions and other events entered into by the entity. Note that while some accounting information systems provide a visible and complete audit trails, others may provide an invisible and/or incomplete trail. A visible audit trail may be in the form of documentation (a paper trail) or an electronic trail. Accounting information systems have a number of audit trails: for example, trails of different transaction cycles and/or of different computer applications.
Depending on the accounting information system, the trail may start from the moment data about the event is first captured within the system to the time of its ultimate disposition in the financial statements. For example, the audit trail of a sales transaction may enable the tracing of the movement in data concerning the transaction from the time the order is placed by the customer until the time the transaction data is included in the appropriate general ledger accounts. The system records may also provide a link to other related transaction cycles. Continuing the example, the system may enable the linking of a particular sales transaction to related cash receipt transactions and inventory transactions. These related transaction cycles may have their own audit trail.
Not unnaturally, auditors look for a complete and visible audit trails as such a trail allows the auditor to quickly understand how data flows through the accounting information system.
An auditor may follow the audit trail of a transaction as part of a systems "walk-through" to either obtain or verify their understanding of the accounting information system.
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