The Ministry of Corporate Affairs vide its notification dated 24.03.2021 and by exercise of the powers stated in Companies Act, 2013 hereby introduced the concept of Audit Trails by inserting proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014.
“For the F.Y. commencing on or after 1st April 2021, every company which uses accounting software for maintaining its books of account, shall use only such accounting software which has a feature of recording an –
However, the MCA deferred the application of the aforementioned proviso until March 31, 2023 in a notification dated 31.03.2022.
The above amendment shall come into force with effect from the 1st day of April, 2023.
What is Audit Trail?
It provides an exhaustive record of all changes made to financial data and keeps track of any alterations to the time, date, user who made the change, what was changed, and their history from the start to the most recent update.
This can be used to support internal and external audits as well as help ensure the accuracy and integrity of financial data. In order to ensure transparency, fraud detection, and the security of financial data, an audit trail is an essential tool for financial reporting.
Important Effects of Audit Trail (Edit Log)
The notification emphasised the following key points:
