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The Ministry of Corporate Affairs (MCA) issued a notification directing companies that use accounting software for maintaining their books of account is required to have an Audit Trail feature, creating an edit log of all transactional changes along with date from 1st April 2022.
To ensure that this is being implemented, companies need to ensure that their existing accounting software comprises an audit trail feature to remain compliant to the latest amendment, at least from 1st April 2022. With this move, business entities would now be required to keep an edit log of all transactions and time stamps, with changes made in the books of account. They also need to enable their workforce to adhere to it. In case their existing software doesn’t come with this feature, they need to consider shifting to accounting software that provides the audit trail feature.
While audit trail (edit log) is mandatory from 1st April,2022, you might have confusion if the rule is applicable for all the businesses? Applicable only for a set or type of companies? Are there any guidelines that define the business applicability of the edit log rule?
To answer, the audit trail (edit log) rule is not applicable for all businesses. This rule applies only to those companies that fall under the purview of Ministry of Corporate Affairs (MCA). In short, if your company is governed by the regulations and guidelines of MCA, you need to ensure you follow the rule from 1st April,2022.
|Why do We Need an Audit Trail (Edit Log) for Businesses?||Audit Trail – Edit Log the New Statutory Watch Guard for Businesses|
As per the Companies Act 2013, the new amendment released by the MCA will be applicable to the following companies, including the companies that are managed State and Central Government, NGOs who are receiving funds from various stakeholders:
The following companies don’t fall under the purview of the audit trail rule:
It is undeniable that having an end-to-end log of all financial events like purchases, sales, and expenses can be proven beneficial to back trace any anomalies in the system. The edit log would, further, enable businesses to analyze each activity, thereby helping in remaining compliant.
The new rule has been introduced to bring transparency and restrict or reduce data manipulation of companies. This also implies that all accounting software is required to have the Audit Trail feature to ensure that their users are compliant with the new amendment and must comprise of the following enhancements:
TallyPrime Edit Log release to handle the edit log requirements issued by the Ministry of Corporate Affairs (MCA). The upcoming product release is built with the following capabilities:
Read More About Audit Trail
Audit Trail – Meaning & Examples, Why do We Need an Audit Trail (Edit Log) for Businesses, How to Prepare your Business for Audit Trail (Edit Log) Rule, 5 Features to Look in Audit Trail (Edit Log) Accounting Software, Audit Trail – Edit Log the New Statutory Watch Guard for Businesses, How Audit Trail (Edit log) can Lead to Increased Compliance and Transparency
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