MCA said in three notifications that any company employing accounting software must utilise software that maintains an audit trail of each transaction and creates an edit log of any modification made in the books of account.
Reetu | Mar 15, 2023 | Views
MCA Notifies Major Change in Audit Trail Requirements from 1st April 2023
The Ministry of Corporate Affairs (MCA) said in three notifications that any company employing accounting software must utilise software that maintains an audit trail of each transaction and creates an edit log of any modification made in the books of account. The programme must also ensure that the audit trail cannot be disabled.
It means, “Every accounting software must have a feature of recording audit trail of every transaction (creation, edit log changes made in books along with date, time) & ensuring that the audit trail cannot be disabled/deleted.”
The Ministry of Corporate Affairs (MCA) issued three notifications, No. G.S.R. 205(E) dated 24.03.2021, No. G.S.R. 247(E) dated 01.04.2021, and No. G.S.R. 235(E) dated 31.03.2022, addressing the use of accounting software by businesses for maintaining their books of accounts.
The notification of March 31, 2022 substituted the figures, letters, and words “1st day of April, 2023” for the figures, letters, and words “1st day of April, 2022” in the proviso to sub-rule (1) of rule 3. In summary, the effective date of implementation has been pushed out to April 1st, this year.
According to the notification, any company that uses accounting software must employ software that provides an audit trail of each transaction and an edit log of each change made in the books of account. The programme must also prevent the audit trail from being disabled.
Auditors have stated in response to the notifications that the trail should cover deleted transactions as well. They have also claimed that they must modify their audit processes and internal control inspections. If a deviation is discovered, it must be disclosed in their reporting.
These alerts are intended to ensure financial sector transparency and accountability. Accounting software with audit trail features can assist avoid financial fraud and guarantee that businesses have correct records.
The provisions make significant changes to the Companies (Accounts) Regulations, 2014. With effect from April 1, 2023, stakeholders are asked to move to or guarantee that the company’s accounting software meets the above requirements.
For Official Notification Download PDF Given Below:
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