Why Audit Trails Matter in Government Accounting

Why Audit Trails Matter in Government AccountingThe Right Software Manages Risks and Keeps You Accountable in the Event of an Audit

When you keep an audit trail, you’re affirming to your town, city, or county that your government accounting practices are legal, legitimate, and transparent. For government agencies and city services, audit trails are invaluable.

Audit trails mean something different to every industry (from local government to nonprofits and health care). But at its core, an audit trail is a chronological record of all the transactions and documents that affect your operations, procedures, and events. And maintaining these records is vital for several reasons.

Audit trails can help you better monitor for fraud. Should your local government agency or city service find itself at a high risk for fraud, your audit trail will make security breaches easier to track down and resolve. Finding fraud isn’t a simple process. According to the Association of Certified Fraud Examiners, fraudulent actions can go a median of 18 months before being detected. But fraudsters leave footprints that an audit trail can find.

Audit trails are a detailed ledger of your agency. This includes financial records for all employees and investors too. With an audit trail, you’ll have more detailed records of who’s moving in and out of your agency.

Audit trails are necessary for state controllers and auditors. An audit trail illustrates that you’re following the law and proper record-keeping protocols. In fact, not having an audit trail, in the event of an internal or external audit, is highly suspect behavior.

Simply put: Audit trails will keep your local government agency or city service out of hot water. By nature, you’re far more susceptible to scrutiny from the state and federal government, but your accounting practices are susceptible to private agencies as well. When you monitor your activity, you mitigate risks and prevent issues down the road.

Audits Aren’t Just Valuable, They’re Ethical

While you may not like the idea of being audited, know that audits are ethically necessary. Audits hold government agencies accountable for their actions and transactions, and can ultimately improve the agency’s standing in the community.

When facing potential audits, government agencies for public service entities like yours must abide by strict standards. Providing records of all your transactions (the what and why) is invaluable when your agency is under an auditor’s microscope. If you don’t have an audit trail, you’ll have a hard time getting through an audit.

You’re also more likely to fail an audit without a reliable, tamper-proof audit trail. From fines to lawsuits, you could face severe penalties. Failing an audit can also negatively affect public opinion regarding your efforts, especially if the external audit is released to the public.

Cougar Mountain Software Helps Government Accounting Teams Stand Up to Auditors

You can effectively manage the risks brought on by potential audits by keeping an audit trail. You might be a government agency or public service entity, but having a tamper-proof audit trail is simply part of what you do. Whenever someone makes changes to an internal system, your audit trail stores who made the change, when, and how.

This is where government accounting software comes into play. If your software doesn’t support an audit trail, it can’t manage the risks associated with your work.

Cougar Mountain Software is fully integrated and affordable. It’s GAAP compliant and was designed for government agencies. Denali’s General Ledger module maintains clear audit trails and makes managing your agency easier. Plus, your Audit Trail Report shows the transaction date, source document, and the user that was logged in.

Other systems might allow for changes to be made to transactions, which leads to fraud, embezzlement, and inaccurate financial records. But Cougar Mountain Software’s Denali can secure your future and maintain your good standing in your community with the use of one of the strongest, tamper-proof audit trails in the industry.

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Cougar Mountain Software develops leading on-premises accounting solutions. Our hallmark software, DENALI, is specifically designed to scale to clients’ needs while maintaining an unbreakable audit trail.