What is an audit trail?

What is an audit trail? When you’re running a business, accurate record-keeping is vital.

At any moment, a problem could crop up that can only be solved by checking through your work history.

That’s where audit trails come in.

What exactly is an audit trail?

An audit trail is a verifiable record of a transaction or process that helps you trace it from beginning to end.

An audit trail, by definition, should include enough detail that anyone examining the audit history will be able to identify who did what and when.

Audit records are used for a wide range of different purposes, such as tracking financial transactions, medical records, and documentation workflow.

What all these have in common is that they need close oversight.

It’s essential to keep records of these processes as they develop in case they need to be checked later.

Let’s take a look at a few audit trail examples to see how this works.

Various audit trail types

You’ll find audit records across a wide range of industries.

They’re used in any situation where it’s important to be able to backtrack and identify details of what came before, including:

Financial records

This could be as simple as an individual receipt or proof of purchase. Or it could involve a full step-by-step record of every transaction made by a business.

For example, if a manager wants to issue their team with specialized software for a particular task, they will generally need to get approval first.

The audit trail for the purchase of the software may look something like this:

Manager raises request with appropriate authority
Approval granted
Purchase order raised
Software purchased and invoice received
Software installed
Receipt filed.

At every stage of the process, there should be a timestamped record of who was involved.

If a problem arises later such as a query over the invoice, it can be solved quickly and easily.

Medical records

With the advent of electronic health records (EHRs) came new digital challenges surrounding patient confidentiality.

In many jurisdictions, healthcare providers are now mandated by law to keep a verifiable audit trail of patient data.

In the US, for example, HIPAA legislation requires healthcare providers that use EHRs to have systems in place to track and review who has accessed them and why.

This means keeping a record of the following pieces of information:

Which patient data was accessed
What was done with it (addition, deletion, change, query, print, copy)
Who accessed it
Date and time of event
Patient identification

Documentation workflow

Modern business practice generates many documents that are worked on by multiple people.

Being able to see who has edited them, what changes have been made, and when is crucial, which is why many organizations use document tracking software to manage workflow.

Business-critical documents that need a watertight audit trail include:

Importance of an audit trail in business and compliance

We’ve already mentioned that the need for HIPAA compliance has been a critical factor influencing audit trails in the medical sphere.

The same need for legal compliance and accountability applies across many different sectors.

And, of course, every organization should keep a financial audit record in case the tax authorities come calling.

If your business doesn’t have its affairs in order when an investigation begins, you’re asking for trouble.

There are other considerations, too. Any industry using electronic records is theoretically vulnerable to cyberattacks.

If the worst should happen and you suffer a data breach, you have to be sure you can act quickly to limit the damage.

Having a solid audit trail for all your data and processes will help.

Essential elements of an audit trail

At base, the concept of an audit trail is fairly simple. You simply keep track of who did what and when.

In practical terms, that means including these details:

What event happened (e.g., viewing a document, submitting an invoice)
Who did it (user ID)
When it happened (date and time).

The important point is that the record-keeping has to be consistent and systematic.

A well-managed audit trail builds up a picture of your processes in chronological order.

That way, if issues arise further down the line, you can back up and check what happened.

How to use PandaDoc for audit trails

PandaDoc provides easy-to-use tools for managing your documentation workflow.

These give you the ability to do all sorts of useful things, such as add electronic signature checkboxes or send notifications to anyone involved in a document.

One key feature is the Audit Trail function, which you can use to access a step-by-step history of document status changes.

This includes everything from each time the document was viewed or edited to who sent it as an email attachment and when.

It builds up a perfect audit record of your documentation in the background as you work.

Validate activity efficiently with PandaDoc audit trail reports

So, to recap: What is an audit trail? Essentially, it’s a record of who did what and when, formalized for convenience.

Keeping consistently maintained audit trails is vital for regulatory compliance and data security purposes.

Whatever your audit trail requirements, PandaDoc can help you keep track with our innovative audit trail software features.

Audit trail reports are fully automated and backed up, which means you can enjoy peace of mind as you get on with the job at hand.

Find out more, by scheduling a 15-minute demo today.