Most Urgent for All Company

According to The Indian Ministry of Company Affairs (MCA) notification dated March 24,
2021 (Companies (Accounts) Amendment Rules, 2021), for the financial year beginning on or
after April 1, 2021, every company that uses accounting software to maintain its books of
account shall use only Accounting Software that has a feature of recording an -
 Audit Trail of each and every transaction,
 Creating an edit log of each change made in books of account along with the date when
such changes were made.
 Ensuring that the audit trail cannot be disabled.
The MCA has later announced that the above amendments will take effect on April 1, 2023,
which suggests that accounting software used by businesses will have to comply with the
Accounts Rules beginning in the financial year 2023-24.

What is an Audit Trail?

An Audit Trail is a detailed, chronological record where accounting, project details, and other
financial data are tracked and traced. It is advisable to have an Audit trail as it would verify and
track all kinds of transactions, work processes, accounting details, trades in brokerage accounts
etc, especially now that the MCA has made it mandatory.

Compliance

You are required to have an Audit Trail according to the Ministry of Company Affairs (MCA)
notification dated March 24, 2021. From April 1, 2022 onwards all the accounting softwares are
expected to have an inbuilt option for audit trail. Maintaining compliance with audit trail
requirements can help you avoid losing business, customers and contracts. Not following up
with the amendments can result in hefty penalties and fines.

You are suggested to immediately install a licensed software of accounting if you are not
already using it. In the software the audit trail should be made operational.