Audit Trail

DEFINITION of 'Audit Trail'

A step-by-step record by which accounting data can be traced to their source. The SEC and NYSE will use this method for the explicit reconstruction of trades when there are questions as to the validity or accuracy of an accounting figure.

BREAKING DOWN 'Audit Trail'

This is the technique used to track improper market activity. By documenting and analyzing all houses and brokers involved in specific trades, those who follow the audit trail can (hopefully) identify the culprit.

RELATED TERMS
  1. Accounting Records

    All of the documentation and books involved in the preparation ...
  2. Internal Audit

    The examination, monitoring and analysis of activities related ...
  3. Statutory Audit

    A legally required review of the accuracy of a company's or government's ...
  4. Audit

    An unbiased examination and evaluation of the financial statements ...
  5. Audit Department

    A unit within a company that is responsible for overseeing the ...
  6. Explicit Cost

    A business expense that is easily identified and accounted for. ...
Related Articles
  1. Financial Advisor

    SEC Audit? No Problem (If You're Prepared)

    Audits are unwanted and unpleasant, but by getting your proverbial ducks in a row ahead of time you can ease and simplify the process.
  2. Investing

    What's an Audit?

    An audit is an objective examination of accounting records that makes sure the records are a fair and accurate representation of the transactions they claim to represent.
  3. Personal Finance

    How Does An IRS Audit Work?

    It doesn't automatically mean an IRS agent will be ringing your doorbell. Here are the different types of IRS audits and how to handle them.
  4. Investing

    Understanding Explicit Costs

    Common examples of explicit costs include wages, utilities, rent, raw materials, and other direct expenses companies pay to conduct business.
  5. Financial Advisor

    Advisors: Warn Clients About These Audit Triggers

    There are several factors that may increase the risk of an audit, especially with high-net-worth clients.
  6. Financial Advisor

    SEC Audit? How Financial Advisors Can Be Ready

    Your firm may never be audited by the SEC, but you need to be prepared nonetheless. Follow these tips to make sure you're in compliance and organized.
  7. Managing Wealth

    Make $1 Million? Expect an Audit

    If you make $1 million or more, the IRS has its eyes on you. Here's what you can do about it.
  8. Managing Wealth

    Accountant: Career Path & Qualifications

    Learn the different career paths a new accountant can take, and understand the educational requirements for the career, which vary based on position.
  9. Managing Wealth

    Common Interview Questions for Internal Auditors

    Identify some of the most common questions asked during internal auditor job interviews, and learn the best responses to put you ahead of your competition.
  10. Personal Finance

    How to Avoid the 6 Most Common Tax Audit Triggers

    These are the most common scenarios that can trigger the IRS to audit a tax return.
RELATED FAQS
  1. What should I do to prepare for an IRS audit?

    Find out how to prepare for an IRS audit, what kinds of audits you might face and what kinds of habits you should develop ... Read Answer >>
  2. What is an IRS letter audit / audit by correspondence?

    Learn about IRS letter audits, how tax returns are selected for audits and the common outcomes in the letter audits conducted ... Read Answer >>
  3. What are the main advantages and disadvantages to the cost accounting method?

    Read a brief overview of the main advantages and disadvantages of the cost accounting method as it relates to business analysis ... Read Answer >>
  4. What's the average salary of an audit clerk?

    Learn how much audit clerks earn per year on average, and review what these finance professionals and others in similar fields ... Read Answer >>
  5. Can the IRS audit you after a refund?

    Learn how the U.S. Internal Revenue Service (IRS) can conduct a tax audit even after a taxpayer was issued a tax refund in ... Read Answer >>
  6. Why does the Internal Revenue Service (IRS) care about accounting practices?

    Learn why the Internal Revenue Service cares about accounting practices, as these ensure the accurate reporting of financial ... Read Answer >>
Hot Definitions
  1. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  2. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  3. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  4. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  5. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  6. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
Trading Center