Important Keywords: Financial Transactions, Evidence, Validating Transactions, Verifying Financial Data, Missing Information, Electronic.
Table of Contents
Introduction
An audit trail is a record that shows the history of a financial transaction. It helps auditors trace a transaction from its source document to the general ledger.
What is an Audit Trail?
It is a sequential record that provides evidence of the financial transactions to its source. It is used to validate and verify the source of a transaction.
It is used by auditors for various purposes such as validating earnings per share and verifying a company’s net earnings and revenue. It is also a useful tool for monitoring finances and other resources in businesses and organizations.
Factors to Consider Its usually starts with an invoice receipt, and the mode of payment for a transaction is validated during the process. Depending on the type of transaction and the number of steps involved, the audit trail can be a simple or complicated process.
Conclusion They are used in various sectors, and they are considered one of the best tools for validating transactions, verifying financial data, and discovering missing information. With technological advancements, electronic audit trails have become automatic, making it easier to validate financial data.
Key Takeaways
- It is a record that shows the history of a financial transaction.
- It helps auditors trace a transaction from its source document to the general ledger.
- They are used to validate and verify the source of a transaction, monitor finances, and discover missing information.
- It usually starts with an invoice receipt, and the mode of payment for a transaction is validated during the process.
- Electronic audit trails have become automatic with technological advancements.
Official Income Tax Return filing website: https://www.incometax.gov.in/iec/foportal/
Official GST common portal website: https://www.gst.gov.in/
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