What Is an Audit Trail? Everything You Need to Know

Is your company following its own rules? Are your company’s processes fit for purpose? Is your business set up to reach its potential? Answering these questions is critical to growth, which is why internal and external auditing processes are so important.

The audit trail is a crucial aspect of any in-house or independent auditor that inspects your processes. In this guide, we discuss what they are and how they contribute to compliance and security as part of a robust records management program.

What is an Audit Trail?

To begin, an audit trail is a sequence of recorded events surrounding a particular application, operating system, or user action.

According to the National Institute of Standards and Technology (NIST), they define it as:

“A set of records that collectively provide documentary evidence of processing used to aid in tracing from original transactions forward to related records and reports, and/or backwards from records and reports to their component source transactions.”

Otherwise known as audit logs, these document particular events to help reduce fraud, errors, and unauthorized use.

Responsible auditing empowers companies to enhance internal controls and improve data integrity and security. This is why they’re described in laws like the Sarbanes-Oxley Act (SOX).

Types of Audit Trails

Auditing can be done internally or externally. It may involve hiring a professional firm that follows the International Standards for the Professional Practice of Internal Auditing or cross-training employees to audit different departments.

Companies will typically invest in both to check the accountability, traceability, and integrity of data as it moves through them. Let’s detail three common types of trails:

• Financial— These trails follow the flow of money into and out of organizations. They focus on areas like purchases, sales, payments, and receipts. For example, even a shopping receipt is a part of the financial audit trail.
• System Audits— System auditing tracks activities within your network, such as user actions, changes to the system, and activities involving sensitive data. It’s critical for industries like healthcare and cybersecurity.
• Transaction-Based— Transaction-based audits focus on specific transactions and events. These could be sales orders or customer interactions. Industries like manufacturing may deploy and examine these audit logs to gain greater visibility of their supply chains.

What Makes a Robust Audit Trail?

Part of any set of audit logs is determining whether it’s robust enough. No single element determines whether your current governance processes are fit for purpose. Instead, multiple components combine to guarantee accountability and transparency.

Here’s a rundown of the key elements and the questions they answer:

• Data Sources – Where does the data come from?
• Timestamps – When was the data created?
• User Identification – Who is accountable for that data?
• Action Details – What happened before, during, and after the event the data pertains to?

These are the basics, but metadata provides the utility your organization needs to refine its records management processes. In a nutshell, metadata is additional information associated with a particular entry. It’s there to provide context. Examples of metadata can include:

• Type of event
• Location
• Transaction ID
• Priority
• Device identifiers
• IP addresses

Metadata offers the context auditors need to understand more about the events from which the data comes. Without well-organized metadata, it can be tough to pinpoint exactly what’s going on within your company.

Importance of Audit Trails in Compliance and Security

Data makes a juicy target for malicious actors because it’s one of a company’s most valuable assets. Believe it or not, only 70% of large companies internally audit cyber incidents – and this is a serious threat to data integrity and security.

Audit trails are pivotal to supporting compliance actions with a range of regulations, including GDPR, CCPA, and industry-specific regulations like HIPAA and SOX. They support everything from effective access controls to proper risk management.

For example, thorough auditing can detect unauthorized device use, system changes, and data migration. Without audit logs, you’re flying blind, acting reactively rather than proactively.

Best Practices for Implementing Audit Trails

Implementing audit trails is the first step to ensuring a high standard of governance within your records management program. But how do you go from thinking about audit logs to implementing them effectively?

• Designate – Designate who will implement and maintain your audit logs. This should include which data to capture and which tools will be used to capture and manage your logs.
• Access Control – Apply the same robust access controls to audit logs as the data itself.
• Compliance – Ensure your audit logs meet the requirements of your industry. For example, if you deal with Personally Identifiable Information (PII), expect to factor in additional standards.
• Storage— Consider how to store your logs securely and for how long. Ninety days is a standard period, but some industries may need to store them longer.
• Real-Time Analytics— Real-time analysis is crucial for detecting malicious activity, unexpected patterns, and system behavior. These tools also provide alerts to increase your response times to critical incidents.
• Deploy WORM Solutions – WORM, or Write-Once-Read-Many, is pivotal to preserving data integrity. They protect your logs from unauthorized changes from inside and outside your organization.
• Training – Relevant staff should be trained to read and interpret audit trails. This could be a high-level employee or your cybersecurity department as a whole. As a rule, those who can access system logs shouldn’t be the same people with administrative rights, as this lack of segregation poses a security threat.

Key Features for Handling Audit Trails

In the past, a man with a clipboard may have managed audit trails. However, today, companies rely on specialized tools to automate the entire process while providing human oversight.

But what are the key features to look for in audit trail technologies? Generally, you should expect, as a minimum:

• Data encryption
• Access controls
• Comprehensive data capture
• Customizability
• Search and analysis capabilities
• Centralized management
• System integration options
• Secure data archiving
• Scalable architecture
• Anonymization

Conclusion

Audit trails are a central part of secure records management. They remain crucial for every business and industry, but the challenges include where to start and what’s needed to create a well-suited auditing system.