Audit Trail Explained in Plain English

Audit Trail can sometime be confusing for someone with no accounting and auditing background. But, here in this article, we are explaining audit trail in plain English. As you know, Sacred Accounting was created just to explain complex terminologies related to accounting, finance, auditing and business strategy to common people in the simplest way.

Definition of Audit Trail

Audit Trail is the ability of users to trace a transaction through all of its processing stages, from scratch until its completion.

There are 2 types of audit trails;

Paper Audit Trail

Where Audit Trial is conducted by going from one paper document to another paper document. This way, a transaction is traced through all of its processing stages.

Electronic Audit Trail

Where audit trial is conducted using computer programs. There is no use of paper documents here. We trace a transaction through all of its processing stages by using computer programs. Whenever we want a specific transaction to be traced, we just trace it by using computer programs which in turn uses system logs to provide them the complete report of any transactions.

Now, you might be wandering, what exactly is a system log?

A system log is nothing, but a record of events/transactions happened in the execution of a system. Some examples of system log are

  • System logs tell us about web pages accessed by a user.
  • Any changes made to a program. It also tells us what kind of changes were made, who made the changes, and when were the changes made.
  • It also provides us detail information about any attempted cyber intrusions.
  • It also provides us with failed log-in attempts and a lot of other information.

Importance of Audit Trail

Audit Trail is important is very important for auditing the financial statements. It allows the auditor to trace a transaction from financial statements to its source i.e. receipt, invoice and voucher etc.

It shows the level of internal controls within an entity. If audit trail is present, it infers that internal controls are very strong. If there is lack of audit trials, it means internal controls are week.

Similarly, it might provide an overview to the management to assess their businesses. By looking at the audit trial, they can find out if the transaction recording and processing process is conducted smoothly or not.


Suppose we want to track payment for an expense appearing in the financial statements. We will conduct Audit Traill as below;

  • First, we will check supporting documents i.e. vouchers and invoices etc. We will look for ‘Paid’ stamp on it.
  • Second, we will check its mathematical accuracy.
  • Then, we will check if the payment for expenses has been recorded in the general ledger.
  • After this, we will check if the payment for expense has been recorded in Trial Balance.
  • Last, we will check if the transaction has been posted to financial statements at appropriate amount.

Audit Trial in QuickBooks

Like any other good accounting software, QuickBooks also stores;

When a transaction is added,

When a transaction is deleted, and

When a transaction is modified.

To access your audit trial on QuickBooks online, Simply, follow the following steps.

  1. Visit
Visit the official website of QuickBooks Online
Quickbooks online

2. Click on Sign-in in the top right corner, and sign in.

Sign in to Quickbooks Online.
Sign in to QuickBooks Online

3. After signing in to your account, go to your Toolbar and select the Gear icon.

You will see a gear icon at the top right corner, select the icon.
Select the gear icon at the top right

4. Select Audit Logs under Tools.

Under Tools, Select Audit Log.
Select Audit Log under Tools

5. The result will be your Audit Trail.

6. You can filter your Audit Trail by user, date and events.

You can filter your audit log in QuickBooks Online.
You can filter your result.

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