When you maintain a complete and accurate audit trail, you can [theoretically] have a stress-free audit process.
Every day, your business records the transactions for that day. It is important to record the transactions correctly and have adequate documentation to support your entries. This documentation acts as an audit trail. There are multiple types of audit trails; this article is about audit trails in your accounting for small business.
What does an audit trail include?
An audit trail is the set of source documents that validate the transactions recorded on your business’s books. When you or your accountant records the business’s transactions, you base the entries on an event or activity of the business. An event can be anything from a daily sales transaction to a building acquisition to the disposal of equipment.