LED Ltd., a manufacturing company, has recently implemented a new ERP system for processing all financial transactions. During the audit, the…

Audit Trail (or Edit Log) is a visible trail of evidence enabling one to trace information contained in statements or reports back to the original input source. Audit trails are a chronological record of the changes that have been made to the data. Any change to data including creating new data, updating or deleting data that must be recorded. Records maintained as audit trail may include the following information: when changes were made i.e., date and time (timestamp)who made the change i.e., User Idwhat data was changed i.e., data/transaction reference; success/ failure Audit trails may be enabled at the accounting software level depending on the features available in such software or same may be captured directly in the database underlying such accounting software. In order to demonstrate that the audit trail feature was functional, operated and was not disabled, a company would have to design and implement specific internal controls (predominantly IT controls) which in turn, would be evaluated by the auditors, as appropriate. An illustrative list of internal controls which may be required to be implemented and operated are given below: Controls to ensure that the audit trail feature has not been disabled or deactivated.Controls to ensure that User IDs are assigned to each individual and that User IDs are not shared.Controls to ensure that changes to the configurations of the audit trail are authorized and logs of such changes are maintained.Controls to ensure that access to the audit trail (and backups) is disabled or restricted and access logs, whenever the audit trails have been accessed, are maintained.Controls to ensure that periodic backups of the audit trails are taken and archived as per the statutory period specified under the provisions of the Act. As per facts of the case, in LED Ltd., the new ERP system shows weaknesses such as shared User IDs and lack of clarity over activation and review of audit trails. Since an audit trail records all data changes with user and time details, it ensures accountability and reliability of financial records. If not properly enabled and monitored, data integrity may be affected. Hence, the auditor should ensure the compliance of above.