Audit trail: What it is, how it works, and why it matters?

As per a report by Security Intelligence, noncompliance with regulations costs firms about $15 million. Audit trails are your digital footprint that helps to ensure accountability and compliance. They are the watchdogs of regulations, the unsung heroes of digital transparency, and the trail of truth. 

In this article, we unravel the complex world of audit trails. We aim to help you understand what it means, the types, and importance, how to create one, the common challenges, and how to overcome them.

What is an audit trail?

An audit trail is a detailed series of records of human activities, application processes, data flows, system snapshots, transactions, administrative changes, security breaches, and more. Used with other tools, audit trails help in detecting security violations, performance issues, and application flaws. 

Audit trails are majorly used to support system operations or processing insurance claims. Organizations may run multiple audits simultaneously using different systems to record a particular activity. 

Who is responsible for the audit trail?

In most organizations, IT managers, system administrators, and security specialists are responsible for managing audit trail activities. Audits can be conducted internally or externally. Although both provide significant insight into security gaps, technical flaws, or functional misses, the key difference between internal and external audits lies in their objectives. 

Internal or management-led audits may be biased due to a lack of rigidness and conflict of interest. Still, they may discover more gaps as they have deeper insight into the system mechanisms and processes. 

However, if management is genuinely motivated to improve security rather than just meeting the bare minimum for legal compliance, internal and external audits play a crucial role. While an internal audit benefits organizations by identifying gaps early, an external audit provides an unbiased validation that strengthens long-term security and compliance.

In comparison, external or third-party administered audits are more rigid and unbiased compared to internal audits. The external audit process ensures that independent auditors operate without constraints or limitations, allowing them to deliver a clean and comprehensive audit report.

Having said that, independent audits lack a certain level of understanding of the systems and mechanisms of an organization compared to the management. External auditors work strictly based on industry guidelines and applicable regulations. 

Also check: How To Get SOC 2 Audit For Small Businesses

Types of audit trail

Organizations can maintain two types of audit records; event-oriented log and keystroke monitoring. Here are the two types of audit trails:

Event-oriented log audit trails

Event based monitoring records system, application, and user events. It specifies information on the events that occurred, the user ID responsible for it, the program command used to initiate it, the causes that led to the event, and the results. 

You can review the date and time to determine if the event source was a masquerader or the specified user. 

Here’s a sample of a chronological list of user commands: 

rcp	user 1	ttyp0	0.02 secs Wed Jan 8 16:02
ls	user 1	ttyp0	0.14 secs Wed Jan 8 16:01
clear	user 1	ttyp0	0.05 secs Wed Jan 8 16:01
rpcinfo	user 1	ttyp0	0.20 secs Wed Jan 8 16:01
nroff	user 2	ttyp2	.75 secs Wed Jan 8 16:00
sh	user 2	ttyp2	0.02 secs Wed Jan 8 16:00
mv	user 2	ttyp2	0.02 secs Wed Jan 8 16:00
sh	user 2	ttyp2	0.03 secs Wed Jan 8 16:00
col	user 2	ttyp2	0.09 secs Wed Jan 8 16:00
man	user 2	ttyp2	0.14 secs Wed Jan 8 15:57

Keystroke monitoring

Keystroke monitoring records every stroke a user makes on a keyboard, along with the system’s response during a given session. This type of auditing is used in special cases. 

Examples of use cases for keystroke monitoring include viewing the typed characters in real-time, reading user emails, and recording other information they type. 

Keystroke monitoring protects systems and data from unauthorized activities and prevents authorized users from exercising outside their privileges. 

Security administrators can assess and take corrective actions against malicious intruder-induced damages by analyzing keystrokes. 

Why should you maintain an audit trail?

Audit trails help businesses identify the effectiveness of system controls in compliance with the adopted policies, review user activity logs to track fraudulent activities, identify the kill chain to mitigate security incidents, and discover flaws within the system.

Let’s analyze each purpose of audit trails: 

Ensure accountability

Technical mechanisms within audit trail systems help IT administrators maintain accountability. By making employees aware of the log system, you can reinforce good security behavior and practices. Users will be less likely to attempt malpractices like leaking or tampering sensitive data.

You can evaluate the before and after versions of a record to link individual logs to suspected data modifications. Doing so reveals the real culprit – external sources, system applications, or an internal user. 

Audit trails function in sync with access control to restrict unauthorized use of certain systems. Sometimes users can misuse authorized systems too, and this is where system logs come to the rescue. 

Maintain event log and reconstruction

Once an incident has occurred, you can use audit trails to reconstruct the events. Use it to pinpoint how, where, when, and why normal operations got disrupted. Audit event analysis also helps to distinguish between operator errors and system failures. 

For example, you can trace or reconstruct the stepwise process of applications, systems, or users. This helps you understand the cause of system failures and compromised integrity of sensitive files. 

It also helps to patch technical glitches like corrupted files using version history to check and reconstruct them.  

Detect intrusions

Intrusion detection is the process of identifying breach attempts into a system using unauthorized access. Configure your audit trail recording tool to collect data that assists in detecting instructions. 

Real-time intrusion detections help to flag unauthorized access to the system. It also identifies issues with the system performance that may indicate the presence of viruses or worms in the form of malicious code. 

Analyze performance 

Apart from instructions, audit trails help to identify issues by continuously monitoring the status of critical systems and applications. 

You can use real-time audit trail monitoring and system performance logs to identify security issues. For example, if your system is using excessive resources, it could indicate a compromise. 

Maintain compliance

If any government regulation or industry standard applies to your organization, maintaining an audit trail demonstrates that you have all the necessary processes, policies, and tools. 

For example, a SOC 2 audit report shows the effectiveness of your controls against the selected Trust Service Criteria (TSC). 

A comprehensive audit trail surfaces the gaps that require your attention so that you can take corrective actions before it becomes a legal issue. It also shows how well your organization meets the requirements of the compliance framework. 

How to perform an audit trail? Tools and processes 

Building an audit trail is always a thought-through and concerted effort. It requires an approach that integrates technology’s automation prowess, humans’ abilities to devise internal controls, and expert judgment to mitigate the findings of risk assessments and penetration testing. 

Here is a detailed look at the entire process of building an audit trail:

Automated tools

Reviewing each system component, writing custom policies, and maintaining it all manually burns out budget and bandwidth. Audit management tools automate a significant chunk of the effort, making the process faster and feasible. 

Automated tools aid security admins in identifying vulnerabilities and security threats like poorly configured access control, outdated systems, weak passwords, unpatched system glitches, or lack of system integrity. 

Automated audit trail software like Sprinto collect evidence of corrective actions, system snapshots, monitoring logs, and more and save it for subsequent review. 

Internal controls audit

In an internal control audit, the auditor evaluates the effectiveness of the selected internal controls of your system. Both system-based and non-system based controls are analyzed. 

Some standard techniques used to assess internal controls are inquiry, observation, and testing data sets and controls. 

Internal control audits also help to detect issues like system irregularities, non compliant components, technical errors, illegal activities, and more. 

Penetration testing

Penetration testing is a security risk assessment technique that surfaces the vulnerabilities which malicious actors can exploit to gain unauthorized access into critical systems. 

Many systems lack effective controls, are incorrectly configured, or are not updated to the latest version. These weaken a system’s ability to prevent malicious actors from gaining unauthorized access. 

Pen testers attempt to break into a system or application to evaluate its security posture by finding vulnerabilities.

Examples of audit trail

Some of the common types of audit trail include: 

Financial 

Financial audit trails assesses and evaluates the financial statements of a company in detail. The main objective in this type of audit is to scrutinize how your organization handles expenses using information in the accounting ledger.  

The SOX (Sarbanes–Oxley Act) is a good example. This U.S based federal law mandates practices for corporations to maintain an audit record of their financial transactions and disclosures. 

Healthcare

Audit trails in healthcare is the process of documenting medical policies, practices, and PHI (Protected Health Information) transmissions. 

The Health Insurance Portability and Accountability Act (HIPAA). The administrative simplification rule of HIPAA establishes guidelines on how to manage, process, transact, and protect PHI to ensure its availability, confidentiality, and integrity. 

HIPAA applies to healthcare businesses and entities that provide any service to healthcare businesses in the United States. 

How to implement and maintain audit trails 

We have listed the best practices and processes to help to manage and maintain audit trails:

1. Establish policies and procedures

Policies and procedures help to improve security posture and ensure privacy. Instead of system specific policies and procedures, you can create them at an organizational level. 

You can either create general security and privacy policies or have multiple policies on the complex nature of the org. 

Procedures describe how to implement the policies and controls based on the individual or an object-specific role. 

Ensure that you address the purposes, scope, roles and responsibilities, management tasks, functional dependencies, and compliance. It should align with the applicable regulations, policies, and guidelines. 

Update your policies and procedures to include audit findings, security incidents, changes within the applicable regulations, executive orders or directives, guidelines, and standards.  

Hate writing policies? Leverage a comprehensive library of pre-built policy templates designed with compliance requirements and recommendations in mind. With Sprinto you can:

✔ Tag policies to single or multiple standards

✔ Edit, publish, and track policy changes easily

✔ Seek acknowledgment from the platform and share its evidence during audits 

2. Event and monitoring logs

Events are observable changes in a system and are important to meet monitoring and auditing requirements. When these events impact system security or data privacy, they should be recorded in the system. 

Examples of event logging include password updates, privacy attribution changes, access failure to systems, query parameters, privileged account uses, or credential use by external stakeholders. 

You should maintain a balance between audit and system requirements. Organizations are often guilty of tracking too much information, thanks to automated monitoring systems. In simple terms, configure your system to record only what is necessary to meet auditing needs. 

Event and monitoring logs checklist:

• Identify events that should be logged to support and meet auditing requirements
• Coordinate event logging with other organizational audit requirements to communicate the selection criteria of events that have to be maintained 
• Justify why the selected events will sufficiently support investigations after an incident
• Review and update the selected event logs as often as needed

Sprinto helps you build, launch, and manage a connected and fully automated compliance program. It continuously monitors controls, identifies anomalies, and helps you complete audits quickly. 

3. Maintain audit records

Your audit trail should detail the type of event, the sequence of events, when it occurred, where it occurred, its source, the outcome, and subjects or entities associated with the event. 

An important consideration while recording audit records is privacy risk – some event logs may contain sensitive personal information. 

For example, system administrators may accidentally disclose personally identifiable information in an audit trail containing logs of usage patterns or time.

4. Ensure adequate system storage 

Determine and allocate storage capacity for audit logs based on the processing requirements and types of logs. 

When you have sufficient storage capacity, it reduces the chances of running out of space, which may result in data loss or hamper the system’s logging capabilities. 

You can avoid storage log issues using the process of audit log transfer or audit off loading, a practice where the data in systems with limited storage capacity is transferred to another facility helps to manage system load. This control supports the availability of data. 

5. Manage audit logging failures

Audit logging process failures include software and hardware errors that result in issues with the mechanisms in capturing logs. Examples include overwriting old records, system shutdown, or pausing the process of audit generation. 

You can define what qualifies as a logging failure based on factors like the type, location, severity, or even a combination of these. 

• Alert the functions, roles, and other stakeholders when the audit repository reaches maximum storage capacity
• Alert the functions, roles, and other stakeholders when an event related to audit failure occurs
• Configure your audit logging system in a way that rejects or delays log processing when the network traffic exceeds its limits
• Configure the audit log system to trigger a complete shutdown, partial shutdown, or run using limited resources to respond to logging failures
• Determine and implement an alternate logging capability to ensure business continuity during logging failures

6. Analyze, review, and report audit records

Reviewing, analyzing, and reporting audit findings consist of information security and privacy logging scans. 

These include account usage, remote access, wireless connections, system component inventory, system configurations, maintenance tools, physical access, equipment delivery or removal, communications at system interfaces, and Voice over Internet Protocol (VoIP) usage. 

Determine the frequency, scope, and depth of audit review, analysis, and reporting based on your organization’s needs and applicable laws. 

• Automate the process of reviewing, analyzing, reporting, monitoring, contingency planning, and incident responding
• Analyze and correlate the audit records across three levels of risk management (organizational, business process, and information system) to ensure or wide awareness 
• Centralize the process of reviewing, analyzing, reporting from multiple system components
• Integrate the analysis of audit records with the analysis of vulnerability scanning information, performance data, or system monitoring information to boost the capability to identify suspicious activities
• Correlate audit record data with physical access log data to boost the capability to identify suspicious activities
• Determine the authorized actions for system processes, individual roles, and users to review, analyze, and report audit logs
• Analyze the logged privileged commands in a physically distinct component or its subset. The analysis includes pattern identification and heuristics
• Use data from non-technical sources to correlate it with audit trail records to detect potential malicious insiders

7. Implement an audit record reduction system

Audit reduction is the practice of consolidating and organizing the collected log data into an easy to digest format. The goal of this practice is to help analysts draw meaningful insights from complex data. 

Your audit record reduction system should have the following capabilities:

• Support the investigation process of incidents
• Identify anomalous behavior using data mining techniques like advanced data filters
• Process, sort, and search for audit records for events as defined by your organization

8. Generate timestamps 

System generated time stamps include date and time. You can define granular timings (tens or hundreds of milliseconds) for each system component. 

Use Coordinated Universal Time (UTC)  or include the local time offset in the timestamp. 

Maintaining timestamps is a critical component that supports security measures like access control and authentication. However, this depends on the type of mechanisms used by these facilities. 

9. Protect audit information

Audit information entails comprehensive details of your system activity like audit records, log configuration, reports, and personally identifiable information. 

You must protect the audit information from unauthorized access, data modification, and accidental removal. Set up an automated alerting system to notify system administrators if any suspicious activities are detected. 

• Write audit trails to hardware-enforced and write-once media. This applies only to the audit trail generated for the purpose of detecting, analyzing, and reporting
• Store audit records in a separate repository from the component that is undergoing the audit. This practice ensures that if the system containing the audit data is compromised, it does not compromise the integrity, confidentiality, and availability of the data in itself.
• Protect the integrity of audit information using cryptographic mechanisms 
• Implement access control privilege to the system containing the audit information to prevent it from being tampered or modified 
• Authorize read only access to non-privileged users to limit potential damage to the integrity of data 

 10. Collect irrefutable evidence 

Evidence is the backbone of the audit trail. You must provide irrefutable evidence of individual activities to prove compliance or conduct forensic investigation. 

• Link the information with the information owner using mechanisms to identify the producer of that information
• Validate that the information owner has actually produced a specific information using cryptographic checksums
• Track evidence lifecycle from its inception, collection, protection, and analysis by documenting the role who collected the data, when it was transferred, and why it was transferred
• Validate the binding between the information owner and information recipient/ handler using cryptographic checksums to prevent unauthorized modification 

Sprinto integrates with your cloud setup to collect evidence – continuously and comprehensively in an audit friendly way that underscores security and proves compliance. 

Challenges of recording audit trail

Undergoing audit is chaotic, confusing, and challenging. While these challenges are unique to each business of their own, here are some of the common road bumps: 

Limited resources: Most organizations lack adequate bandwidth and resources to manage auditing activities. Limited resources result in various complexities like mismanagement and timing issues. 

Outdated systems: If you are still using tools like Excel Sheet, siloed solutions, and Google Drive, you are not alone. These systems are not just error prone, but manual effort intensive.

Deciphering legal jargon: Thanks to the complex nature of regulation, a common challenge that many companies, especially smaller ones with no auditing experience face is decoding legal speech and translating it to the requirements. 

Creating policies: Despite the availability of ready-to-download policy templates, policies are not a one-size-fits-all all. As a result, organizations often spend months creating custom policies from scratch. 

Managing multiple audits: Adding to the chaos of limited resources, unraveling regulations, and creating policies, many orgs struggle to maintain and implement multiple audits with different requirements.

Budget constraint: Lastly, audits are not cheap. Subscription charges for different tools, auditor consultancy fees, and certification charges – all add up to a hefty bill. 

How to overcome audit trail challenges?

Preparing for audits is daunting – the blind spots, fear of missing deadlines, managing multiple audits, and surprises make it a dreaded activity. But it doesn’t have to be. 

Sprinto is an audit management tool that gives you the control and confidence to launch, manage, and ace the most complex audit effortlessly using smart automation at a fraction of the cost. 

• Zero red flags or false positives – native integrations help you collect audit evidence. It syncs to new risks and controls while eliminating last minute surprises. 
• Multiple audits, single dashboard – plan and prepare for multiple audits without breaking the bank and breaking a stride. Define audit periods for each framework or business unit to manage it all seamlessly.
• Audit-grade security – Implement and run audit grade compliance programs for  SOC 2, ISO 27001, HIPAA, or a custom framework for super fast certification. 

Still confused? Let our experts help you. Connect to us now!

FAQs

What is an audit trail, and why is it important?

An audit trail is a log of evidence of compliance in chronological order that builds up to audits. Depending on the framework you’re complying with, it contains system activities, transactions, data movements, and more.

Is audit trail mandatory for all companies?

Audit trail is mandatory for organizations who are liable to any type of regulatory requirements. For example, many public companies must maintain financial records. A detailed and accessible audit trail is useful for both auditors and organizations. 

How frequently are audit trails conducted?

Audit trail requirements such as frequency depend on various factors like the applicable regulatory compliance, size of company, risk of fraud, type of data you process, the primary location of your business, the industry or sector, and more. 

What are the key components of a strong audit trail?

A strong audit trail includes timestamps, user activity logs, data modifications, access records, and system events, all secured with proper encryption and access controls.

What should be included in an audit trail?

An audit trail should include a chronological record of activities, accounting entries, security events, the command used to initiate an event, user access privileges, and more. 

How do automated tools enhance audit trail management?

Automated tools simplify and streamline audit trail management. They connect with systems, cloud infrastructure, and networks to automatically collect evidence of compliance against each control. Moreover, they are free of human error and tampering, making compliance and audits effortless. 

How does an audit trail support cybersecurity and compliance?

Audit trails help organizations detect suspicious activity, investigate security incidents, and provide evidence for compliance audits with standards like ISO 27001, SOC 2, and HIPAA.