Starting from 1st April 2023, the Ministry of Corporate Affairs has made it compulsory for businesses to maintain an audit trail for all transactions. The new rule necessitates the use of accounting software with an audit trail (edit log) feature to record and track any changes made to transactions. Auditors will be responsible for reviewing and controlling the audit trail. The effective implementation date for this audit trail rule was initially planned for 2021 but was later postponed to 1st April 2023.
As per the MCA’s requirements, the accounting software used by companies should be capable of tracking every change made in transactions, including capturing dates and timelines for such changes. Importantly, the audit trail (edit log) cannot be disabled, ensuring data integrity and preventing tampering.
• Accounting software used by the company must have the capability to track all changes made in transactions.
• The software should capture the dates and timelines when such changes were made for accurate auditing.
• It is crucial that the audit trail (edit log) cannot be disabled to maintain data integrity.
• The edit log feature should be operational throughout the year and protected against tampering.
• The audit trail (edit log) must be preserved according to record retention requirements.
• Certified public accountants (CAs) are mandated to verify the compliance of the accounting software.
• The software should track edits for masters and every transaction for comprehensive monitoring.
• Changes made, including date details and usernames, should be recorded for thorough accountability.
• The software must provide a difference report to display modified elements for easy reference.
• Reports should be enhanced with filters to facilitate streamlined access to edited transactions.
• The design of the software ensures the edit log feature remains enabled at all times to adhere to MCA guidelines of ‘Edit trail cannot be disabled.
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