Event Sourcing in Azure: Building Audit Trails for Financial Systems

---

Why Audit Trails Matter in Finance

Financial systems require immutable, granular audit trails to:

• Meet regulations (GDPR, SOX, PCI-DSS).

• Trace fraudulent transactions.

• Reconstruct historical states for dispute resolution.

• Debug complex workflows (e.g., payment reversals).

Traditional CRUD databases fall short—they overwrite data, losing critical context. Event sourcing solves this by capturing every state change as an event.

---

What is Event Sourcing?

Event sourcing persists state changes as a sequence of events rather than storing only the current state. For example:

Copy

1. AccountCreated (AccountId: 123, Owner: "Alice")  
2. FundsDeposited (AccountId: 123, Amount: $100)  
3. FundsWithdrawn (AccountId: 123, Amount: $50)

By replaying events, you can rebuild the account’s current balance ($50) or audit past states.

---

Azure Architecture for Event Sourcing

Copy

[Financial App] → [Azure Event Hubs (Ingest Events)] → [Azure Functions (Process Events)]  
                    ↓                                  ↓  
[Azure Cosmos DB (Event Store)]          [Azure Blob Storage (Archival)]

Key Components

1. Azure Event Hubs: Ingest high-volume transaction events (e.g., 100K events/sec).

2. Azure Cosmos DB: Store events with a change feed for real-time processing.

3. Azure Functions: Serverless compute to validate, enrich, and project events.

4. Azure Blob Storage: Archive old events for cost-effective compliance.

---

Step-by-Step Implementation

1. Define Events (C# Example)

public interface IEvent { }  

public record AccountCreated(string AccountId, string Owner) : IEvent;  
public record FundsDeposited(string AccountId, decimal Amount) : IEvent;  
public record FundsWithdrawn(string AccountId, decimal Amount) : IEvent;

2. Publish Events to Event Hubs

[FunctionName("PublishTransaction")]  
public static async Task<IActionResult> Run(  
    [HttpTrigger(AuthorizationLevel.Function, "post")] HttpRequest req,  
    [EventHub("transactions", Connection = "EventHubConnection")] IAsyncCollector<EventData> output,  
    ILogger log)  
{  
    var transactionEvent = await req.ReadFromJsonAsync<IEvent>();  
    var eventData = new EventData(Encoding.UTF8.GetBytes(JsonSerializer.Serialize(transactionEvent)));  
    await output.AddAsync(eventData);  
    return new OkResult();  
}

3. Store Events in Cosmos DB

Use Cosmos DB Change Feed to persist events:

[FunctionName("PersistEvents")]  
public static async Task Run(  
    [EventHubTrigger("transactions", Connection = "EventHubConnection")] EventData[] events,  
    [CosmosDB("auditdb", "events", Connection = "CosmosDBConnection")] IAsyncCollector<AuditEvent> output,  
    ILogger log)  
{  
    foreach (var eventData in events) {  
        var auditEvent = new AuditEvent {  
            Id = Guid.NewGuid().ToString(),  
            EventType = eventData.Properties["EventType"].ToString(),  
            Payload = Encoding.UTF8.GetString(eventData.Body),  
            Timestamp = DateTime.UtcNow  
        };  
        await output.AddAsync(auditEvent);  
    }  
}

4. Rebuild State (Projections)

Replay events to compute current state:

public class AccountProjection  
{  
    public decimal Balance { get; private set; }  
    public void Apply(AccountCreated created) => Balance = 0;  
    public void Apply(FundsDeposited deposited) => Balance += deposited.Amount;  
    public void Apply(FundsWithdrawn withdrawn) => Balance -= withdrawn.Amount;  
}

---

Real-World Use Case: Fraud Detection

Problem: A bank needed to trace how a $1M discrepancy occurred across 10K transactions.

Solution:

1. Stored all transactions as events in Cosmos DB.

2. Replayed events to rebuild daily balances.

3. Identified a malformed batch job withdrawing funds twice.

Outcome:

• Reduced audit time from weeks to hours.

• Automated alerts for anomalous event patterns.

---

Best Practices

1. Idempotency

• Use event IDs to avoid duplicate processing:

    if (await _repository.EventExists(eventId)) return;
  

2. Schema Versioning

• Include event version numbers and use upgraders:

    public class FundsDepositedV2 : IEvent {  
        public string AccountId { get; init; }  
        public decimal Amount { get; init; }  
        public string Currency { get; init; } // New field  
    }
  

3. Security

• Encrypt events with Azure Key Vault-managed keys.

• Restrict access using Azure RBAC.

4. Performance

• Use Cosmos DB partitioned collections for scalable event storage.

• Archive older events to Blob Storage with lifecycle policies.

---

Challenges & Solutions

---

Conclusion

Event sourcing on Azure provides end-to-end auditability for financial systems, turning compliance from a burden into a competitive advantage. By combining Event Hubs, Cosmos DB, and serverless compute, you can build systems that are both resilient and transparent.