As regulations, laws, and mandates evolve, businesses are finding new ways to protect their assets and reputations.
Compliance with state and federal regulations that protect employee rights and require businesses to maintain an audit trail report can be challenging and time-consuming.
However, it is well worth the investment to invest in a quality, secure network that backs up historical business activities. Without hard evidence to prove that compliance was met, an organization can face penalties, a damaged reputation, or even bankruptcy.
While some businesses still manually store transaction data to ensure compliance, many organizations are implementing a full-service software solution that automates and stores large quantities of important data. With a secure and accessible system on-site, businesses are better prepared to deal with future challenges.
Read ahead to learn the importance of audit trail reports and how they are utilized throughout different industries-
The Ins and Outs of Audit Trail Reports
Audit trail reports are manual or digital documents that give a sequential order of actions or policies to provide historical evidence and records.
This collected data is utilized as evidence to justify future actions or alleviate difficulties and risks. Different businesses use audit trail reports to verify compliance with laws/regulations and demonstrate legitimacy as an organization.
Typically, audit trail reports are contained on-site in a systemized and secure network. Their features include-
- A timestamp that records the time zone and date range that the person accessed the data.
- Any real-time data collected at the moment of document creation, change, or elimination.
- A secure storage infrastructure that makes it impossible for an unauthorized user to alter the details of the report.
- Documentation of the specific person who handled the event/data input/change.
- A historical record of information and values that occurred before the event/data input/change.
The Importance of Audit Trails
The more detailed information included in an audit trail report, the better prepared and apt to handle challenges an organization is.
Whether it is maintaining timekeeping records to show compliance with FLSA standards or documenting the sequential remodels that led to a finalized product, maintaining audit trail reports are crucial to running a successful business.
Audit trails must be accessible to management and applicable regulators when needed. For example, HIPAA requires health providers to maintain logs to meet certain health regulations.
If there is a dispute from a patient regarding a breach of contract, a health provider needs to make certain that there is evidence to back up the assertion that HIPAA laws weren't breached.
For these reasons, it's essential to preserve documentation for the entire active life of the activity. Most businesses maintain records for more than two years to protect themselves from future investigations.
Companies can also use audit reports to gain insight into business activities and make better decisions in the future. Keeping historical evidence on-hand can help pinpoint bottlenecks or inefficiencies that plagued the business and decreased innovation.
For example, a manager may use an audit trail report to analyze financial records and see which factors led to a decrease in sales. Regular reporting by using historical data can help prepare for future events and circumstances.
How Audit Trails are Used
It's been determined that audit trail reports serve an important purpose and provide a way for businesses to protect themselves. Audit trail reports are also used for-
1. Searching for Lost Transactions
There are many reasons why a business may want to find a lost or old transaction. Perhaps a customer wants to return an expensive item but has no receipt to prove that he/she bought it in the first place.
Or maybe a restaurant manager is suspicious of a server who consistently generates large tips on very small bills. Whatever the reason, the ability to find a transaction is of paramount importance to every organization.
Accounting software that holds audit trail reports has functionality that tells the steps needed to find a lost transaction.
Even if a user only has the date of the transaction or knows the person who performed it, it is typically enough information to find it. By reviewing logs for a day or specific person and correlating them to the transactions management already has evidence of, the user can find the misplaced one.
2. Detecting Fraud
An audit log trail is helpful to uncover theft or fraud in a business. Business intelligence software can record all of the various data behind each event or change at the moment it was entered into the system and records the metadata regarding those who have made a change or edited a transaction.
Therefore, an audit report can verify the employee who used the system to illegally change something and commit fraud.
This data is useful as evidence in case management needs to terminate an employee who committed fraud. It is also helpful if an employee sues for lost wages or wrongful termination when he/she committed a crime.
Investigators may ask for audit log trails if a case such as this goes to court and businesses need to prepare themselves for this possibility.
3. Ensuring Disaster Recovery
If there is a corrupted file or network shutdown that prevents a user from accessing a recent transaction, an audit trail report for that entire day helps to reinstate the corrupted files.
If logs have been backed up in a secure location for a long time, reports can remake the activities that occurred during that corrupted time frame. Depending on the software, this process may be difficult and time-consuming but it's an essential way to retrieve lost files if there is no other way to retrieve them.
This can be a helpful tactic in several circumstances, particularly if a regulator is asking for documentation of a transaction or if there is a worker claim suit where evidence of employee activities is required.
Technology has failed every organization at one point or another as business intelligence solutions aren't bulletproof from failure. Utilizing a backup log of historical data is an excellent way to prepare for these breakdowns and unexpected challenges.
4. Achieving Compliance
Every business in America is required to follow certain laws and regulations to stay open. Several industry-related regulations protect workers, maintain the integrity of banking institutions, and demand health providers meet certain guidelines.
Navigating these complex laws can be challenging, particularly for small businesses that don't have the type of resources that larger enterprises do.
Maintaining an audit trail log is essential to use as evidence to prove compliance and challenge fraudulent claims.
Investing in a software solution with functionality that backups years of audit logs will provide a return on investment and save an organization from potential problems that cost valuable resources, time, and money.
In conclusion, here are the key takeaways to remember about audit trail reports-
- An audit trail report contains digital or manual documents that provide evidence of historical transactions or a sequential list of actions.
- Typically, audit reports include a timestamp of when the activity occurred, real-time data of the incident, documentation of the person who handled the transaction, and a record of data for events that occurred before the activity in question.
- Audit report logs are held in secure infrastructure that makes it very difficult for unauthorized personnel to tamper with.
- Audit logs are important because they help an organization be prepared to handle future challenges and actions. Certain regulations and laws require businesses to maintain records of their information and store it in a safe location.
- Audit logs are typically used to search for lost transactions, detect fraud, a means of disaster recovery, and to ensure compliance.