diff --git a/packages/ragbits-core/tests/unit/audit/test_trace.py b/packages/ragbits-core/tests/unit/audit/test_trace.py
index 98a14e48..1cc1591a 100644
--- a/packages/ragbits-core/tests/unit/audit/test_trace.py
+++ b/packages/ragbits-core/tests/unit/audit/test_trace.py
@@ -1,8 +1,124 @@
+import asyncio
 from collections.abc import Callable
+from unittest.mock import MagicMock
 
 import pytest
 
-from ragbits.core.audit import _get_function_inputs
+from ragbits.core.audit import _get_function_inputs, set_trace_handlers, trace, traceable
+from ragbits.core.audit.base import TraceHandler
+
+
+class MockTraceHandler(TraceHandler):
+    def start(self, name: str, inputs: dict) -> None:
+        pass
+
+    def stop(self, outputs: dict) -> None:
+        pass
+
+    def error(self, error: Exception) -> None:
+        pass
+
+
+@pytest.fixture
+def mock_handler() -> MockTraceHandler:
+    handler = MockTraceHandler()
+    set_trace_handlers(handler)
+    return handler
+
+
+def test_trace_context_with_name(mock_handler: MockTraceHandler) -> None:
+    mock_handler.start = MagicMock()  # type: ignore
+    mock_handler.stop = MagicMock()  # type: ignore
+    mock_handler.error = MagicMock()  # type: ignore
+
+    with trace(name="test", input1="value1") as outputs:
+        outputs.result = "success"
+
+    mock_handler.start.assert_called_once_with(name="test", inputs={"input1": "value1"})
+    mock_handler.stop.assert_called_once_with({"result": "success"})
+    mock_handler.error.assert_not_called()
+
+
+def test_trace_context_without_name(mock_handler: MockTraceHandler) -> None:
+    mock_handler.start = MagicMock()  # type: ignore
+    mock_handler.stop = MagicMock()  # type: ignore
+    mock_handler.error = MagicMock()  # type: ignore
+
+    with trace() as outputs:
+        outputs.result = "success"
+
+    mock_handler.start.assert_called_once_with(name="test_trace_context_without_name", inputs={})
+    mock_handler.stop.assert_called_once_with({"result": "success"})
+    mock_handler.error.assert_not_called()
+
+
+def test_trace_context_exception(mock_handler: MockTraceHandler) -> None:
+    mock_handler.start = MagicMock()  # type: ignore
+    mock_handler.stop = MagicMock()  # type: ignore
+    mock_handler.error = MagicMock()  # type: ignore
+
+    with pytest.raises(ValueError), trace(name="test"):
+        raise ValueError("test error")
+
+    mock_handler.start.assert_called_once_with(name="test", inputs={})
+    mock_handler.error.assert_called_once()
+    mock_handler.stop.assert_not_called()
+
+
+def test_traceable_sync(mock_handler: MockTraceHandler) -> None:
+    mock_handler.start = MagicMock()  # type: ignore
+    mock_handler.stop = MagicMock()  # type: ignore
+    mock_handler.error = MagicMock()  # type: ignore
+
+    @traceable
+    def sample_sync_function(a: int, b: str = "default") -> str:
+        return f"{a}-{b}"
+
+    result = sample_sync_function(1, b="test")
+    assert result == "1-test"
+
+    mock_handler.start.assert_called_once_with(
+        name="test_traceable_sync.<locals>.sample_sync_function",
+        inputs={"a": 1, "b": "test"},
+    )
+    mock_handler.stop.assert_called_once_with({"returned": "1-test"})
+
+
+async def test_traceable_async(mock_handler: MockTraceHandler) -> None:
+    mock_handler.start = MagicMock()  # type: ignore
+    mock_handler.stop = MagicMock()  # type: ignore
+    mock_handler.error = MagicMock()  # type: ignore
+
+    @traceable
+    async def sample_async_function(x: int) -> int:
+        await asyncio.sleep(0.01)
+        return x * 2
+
+    result = await sample_async_function(5)
+    assert result == 10
+
+    mock_handler.start.assert_called_once_with(
+        name="test_traceable_async.<locals>.sample_async_function",
+        inputs={"x": 5},
+    )
+    mock_handler.stop.assert_called_once_with({"returned": 10})
+
+
+def test_traceable_no_return(mock_handler: MockTraceHandler) -> None:
+    mock_handler.start = MagicMock()  # type: ignore
+    mock_handler.stop = MagicMock()  # type: ignore
+    mock_handler.error = MagicMock()  # type: ignore
+
+    @traceable
+    def void_function(x: int) -> None:
+        pass
+
+    void_function(1)
+    mock_handler.start.assert_called_once_with(
+        name="test_traceable_no_return.<locals>.void_function",
+        inputs={"x": 1},
+    )
+    mock_handler.stop.assert_called_once_with({})
 
 
 @pytest.mark.parametrize(