Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Audit Trail

What it is:

An audit trail refers to the complete record of events that occurred in the execution of a transaction.

How it works (Example):

When a transaction is executed (e.g. a business purchase), each documented step taken makes up the audit trail. Depending on the transaction, the audit trail can be highly complex or very simple.

For instance, the audit trail for the purchase of a carton of milk would consist only of the receipt for the transaction. This receipt details the exchange of cash for the item purchased (milk), the date, and the institution where it occurred (the store).

Why it Matters:

The records comprised in an audit trail can be reviewed with diligence in the event that accounting figures fail to reconcile. Recreating a transaction step-by-step will reveal where a breakdown in the process occurred (if any).

Related Terms View All
  • Closing Quote
    The New York Stock Exchange has the most famous closing bell (so famous that the term has...
  • Offset Mortgage
    For example, let's say John Doe has a checking account, a savings account and a mortgage...
  • Footsie
    The stocks in this index represent more than 80% of the value of all issues traded on the...
  • Yield Elbow
    Also known as the term structure of interest rates, the yield curve is a graph that plots...
  • Managed Futures Account
    When you buy a managed futures account, in essence you're hiring an expert to buy, sell...