The most tedious hike on the Pacific Crest Trail. Also, a series of accounting records that allow people to follow how money has been spent.
It may seem relatively obvious where money gets spent. In a large company, though, the way funds get distributed sometimes becomes murky. To keep tabs on everything, a system of documentation is put in place, making sure a paper trail exists that the accountants can follow later. This documentation is known as the audit trail, or sometimes the audit log.
Here's a quick example: you take a flight for a business trip. The audit trail for the flight might be the ticket confirmation, the statement from your company credit card showing the purchased ticket, the approval from your supervisor, and maybe some info about where you were going.
Related or Semi-related Video
![Finance: What is Cumulative Voting?](https://media1.shmoop.com/video/thumbnails/COURSE.FINANCE.705_770x433.jpg)
Finance: What is Cumulative Voting?6 Views
Finance, a la shmoop. What is cumulative voting? All right people there are two
flavors of voting in the land of common stock, there's cumulative and statutory. [Two ice cream cones held next to each other]
Cumulative voting just somehow sounds cooler, doesn't it? It allows teams to [Guy points at the ice cream cone and drops it]
join forces and pool their votes cumulatively
for target candidates to get elected that is it allows for the disaggregation,
$5 word there, of board members when voting. That is if a shareholder has one [5 dollar price tag appears]
percent of the common shares outstanding of a company and cumulative voting is [Pie chart showing the small 1% holding]
allowed and there are five candidates being elected, well that shareholder can
vote effectively five percent of their total shares voteable for just one
candidate. Said graphically with blood and guts it looks like this. Cumulative [Table showing shares equalling number of votes per candidate]
voting helps the little guy to have a big presence, with only 1% of the shares [Kid sat at a shareholder meeting]
the little guy can be felt as a 5% holder which makes you know him or her a [Kid jumping to hit a Mario coin box]
relatively major player. It also encourages boards to rotate seats [People swapping seats in the boardroom]
gradually, that is if there were seven seats coming up for election while that
1% could feel like 7% which starts to get dangerous in a contentious board and [The people in the boardroom start fighting]
company situation. You can imagine someone who only owns a small part of
the shares outstanding could elect a whole lot of board. Yeah that'd be a [Wooden boards replace the people in suits]
little scary. Well, score one for the little guy... [Kid laughing will an evil face]
Up Next
What is Adverse Audit Opinion? An adverse audit opinion signals that an auditor has found flaws in a company’s financial statements. Adverse audi...
How does a board of directors function? Public companies, as well as some private corporations and non profit groups, have a board of directors. Us...
What is a proxy? Proxy statements are documents that are sent to shareholders of public companies that contain detailed information on agenda subje...
What is non-voting stock? Non voting stock is a class of stock that carries no voting rights on agenda items subject to shareholder vote. While som...