How Do Audit Trails Help Explain Changes to Bookkeeping Records?
Audit trails can help explain bookkeeping changes by showing who altered a record, when, and what details changed. They may also record original values, subsequent edits and system interactions. This history can be useful for owners, and accountants to review discrepancy, understand corrections, and associate figures to supporting documentation.
Trace Changes Back To Their Source
A transaction history provides context as to why numbers are different if figures conflict. For instance, an office supplier bill category could move from office expenses to equipment after a review and the edit history should provide that context on why it changed.
In a cloud bookkeeping software, a available history may record who made the change and when, but this will depend on the product and type of transaction, so an analyst should know which fields appear versus assumed. Audit trails do not always reflect the business rationale on why a business made the entry change and provide limited context in reconciliation.
Explain Corrections with Supporting Documentation
An audit trail shows activity but will not provide the business reason for the edit. Changing an invoice amount could mean a correction, a data entry error or other issues, but the log alone cannot say which one it is.
The support for the edit should be attached along a correction note of why the edit was done if applicable, plus the approval and reference column will allow another bookkeeper to track why the discrepancy was done with proper authorization instead of relying only on the history.
Investigate Differences during Routine Reviews
Owners, bookkeepers and external accountants can use the transaction history of a reconciliation, routine month-end reviews, account analysis or to understand the figures of prior bookkeepers. Start with the affected balance where numbers diverge, find similar transactions, identify the difference with the attached bank documents, invoices, and approvals.
Review the action date of the transaction, which may have been processed on a later period. An invoice in March can be edited in April, so a search in March may not show the required information. Automated entries may also create a footprint or action, but the person performing the audit should take note that the software will have fewer details in who processes the change, and it should match the account review.
Understand Limits before Relying On Logs
By comparing different cloud bookkeeping software's, make sure to take note if history, users, retention length, and export features are available. Take note that deleted or voided transactions or associated third-party software have a footprint.
An audit trail cannot ensure that transactions are authentic or categorized correctly, as shared accounts and misconfigured settings will record edits under a different person. Take care in ensuring that bookkeeping is operated under personal accounts, unusual edits are reviewed, and supporting documentation is available for reference.
Author Bio:
Robert writes about online cloud accounting platforms, document management software and process automation & bookkeeping. Optimize your financial workflow with precision and ease using our advanced cloud accounting software. Ready to revolutionize your accounting? Visit here!