The Ministry of Corporate Affairs (MCA) vide its notification dated 24.03.2021 brought a new concept of “Audit Trail” by introducing a new proviso in Rule 3, sub-rule (1) of the Companies (Accounts) Rule, 2014. Pursuant to the said rule w.e.f., 01st April, 2023 now every company is required to use accounting software for maintaining its books of account (i.e. companies which maintain their books of account in electronic mode), which has a feature of recording audit trail of each transaction.
Here, Audit Trail means a system that traces the detailed transactions relating to any item in an accounting record and which comprise the features of recording trail of each transaction, i.e., to create edit log of each change made in the books of account, capture the date details when such changes are being made and such software to ensure that the edit trail cannot be disabled.
The statutory auditor of the Company is also required to discuss the same in his report that the company has used such accounting software for maintaining its books of account which has a feature of recording audit trail and the same has been operated throughout the year for all transactions recorded in the software and the audit trail feature has not been tampered with and the audit trail has been preserved by the company as per the statutory requirements for record retention.
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