Reliable audit trail (business controls)

A reliable audit trail documents the link between each invoice and the transaction it reflects.

Definition

A reliable audit trail is one of the means recognised by the EU VAT Directive to ensure the authenticity of origin and the integrity of content of an invoice.

It consists of a set of business controls that establish a documented, continuous link between an invoice and the supply of goods or services that underlies it.

How it works

In practice, a business must be able to reconstruct a transaction's journey by linking together the documents that evidence it:

• purchase order;
• delivery or goods-received note;
• invoice;
• proof of payment.

If these documents cross-reference and reconcile, the invoice is deemed authentic and intact, with no electronic signature required.

Good to know

A reliable audit trail is a process-oriented rather than a technology-oriented approach: it relies on internal organisation and data consistency, not on a cryptographic device.

It must be proportionate to the size and risk of the business and remain effective throughout the legal retention period for invoices.