Accounting Logs: Audit, Accountability & Differences

TL;DR

Accounting logs record financial transactions. Auditing checks if those records are correct and follow rules. Accountability means knowing *who* did what in the system. They’re related but different – auditing finds errors, accountability prevents them (and helps fix issues when they happen).

1. What Are Accounting Logs?

Accounting logs are a detailed history of all financial events within your business. Think of them as a digital trail for every penny in and out. They include:

• Transaction Date & Time: When the event happened.
• User ID: Who made the change (crucial for accountability).
• Transaction Type: Sale, purchase, refund, payment etc.
• Account Affected: Which account in your chart of accounts was changed.
• Amount: The value of the transaction.
• Description/Reference Number: Details about the transaction (invoice number, customer ID).

These logs are often stored in databases or specific accounting software files.

2. Accounting Audits: Checking for Accuracy

1. What is an Audit? An audit is a systematic review of your financial records to verify their accuracy and compliance with regulations (like tax laws).
2. Types of Audits:
   • Internal Audit: Done by people *within* your company. Focuses on improving processes and finding internal controls weaknesses.
   • External Audit: Done by an independent firm. Provides an unbiased opinion on your financial statements for stakeholders (investors, banks).
3. Audit Process:
   • Planning: Defining the scope and objectives of the audit.
   • Testing: Examining transactions, documents, and controls. This might involve sampling (checking a portion of records) or full reviews.
   • Reporting: Documenting findings and recommendations.
4. Example Audit Check: Verifying that all sales invoices have corresponding entries in the general ledger.

   SELECT invoice_number, total_amount FROM sales WHERE date BETWEEN '2023-01-01' AND '2023-12-31';

3. Accounting Accountability: Knowing Who Did What

1. What is Accountability? This means having a clear record of which user performed each action in the accounting system. It’s about responsibility and preventing fraud or errors.
2. How to Implement Accountability:
   • User Accounts: Every employee should have their own unique login. Never share accounts!
   • Access Controls: Limit what each user can see and do based on their role (e.g., a sales person shouldn’t be able to change chart of account settings).
   • Audit Trails: Detailed logs that track every action taken by each user, including timestamps.

     SELECT username, date, action FROM audit_log WHERE table_name = 'sales';

   • Two-Factor Authentication (2FA): Adds an extra layer of security to logins.
3. Example Accountability Check: Identifying who deleted a vendor record.

   SELECT username, date FROM audit_log WHERE table_name = 'vendors' AND action = 'delete';

4. Key Differences Summarised

5. Why Both Are Important

Audits and accountability work best together.

• Accountability helps prevent errors that audits find. Strong access controls reduce the risk of mistakes or fraud in the first place.
• Audits rely on good accountability data. If you don’t know who made a change, it’s hard to investigate discrepancies.