An audit trail (also called audit log) is a security-relevant chronological record, set of records, and/or destination and source of records that provide documentary evidence of the sequence of activities that have affected at any time a specific operation, procedure, event, or device.
The Ministry of Corporate Affairs (MCA) has issued a notification (Companies (Accounts) Amendment Rules, 2021), that every company which uses accounting software for maintaining its books of account shall use only the accounting software where there is a feature of recording audit trail of each and every transaction, and further creating an edit log of each change made to books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled.
The Government notified the Companies (Accounts) Amendment Rules, 2021 which seeks to amend Companies (Accounts) Rules, 2014, below.
In rule 3, in sub-rule (1), the proviso shall be inserted which says, “Provided that for the financial year commencing on or after the 1st day of 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 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 and ensuring that the audit trail cannot be disabled.” In rule 8, in sub-rule (5), after clause (x), the two clauses shall be inserted.
The notification shall come into force with effect from April 01, 2021.
Effective today Audit trails are mandatory for accounting software used by all Companies. PFB some guidance issued by the following :
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