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Starting from the financial year 2023-2024, accounting software used for maintaining books of accounts should have an edit log feature. This is applicable to all the businesses that fall under the purview of MCA.
In simple words, the new audit trail rule in accounting software will now be implemented from 1st April,2023. This was originally planned for 2021 and but later the effective date was moved to 1st April,2023.
The Ministry of Corporate Affairs has explicitly notified some important requirements of the audit trail, which are listed below:
|Audit Trail Rule (Edit Log) in Accounting Software from 1st April,2023|
The ministry needs these 3 features in the accounting software to bring transparency, however a business will need much more to implement, use, and manage such a tool.
A long transition with a total shutdown is not the cup of tea any business wants. A software or a feature that is easily implemented or switched-on will be the need of the hour. Also, a zero-maintenance system with close to no technical dependency is preferred and will be easily adopted by the businesses. Such system will have the desired penetration and lead to maximum compliance in the shortest period.
The whole intent to make audit trail mandatory reflects the concern about the transparency in the current system. The leaks may be due to neglect, design, or coincidence. A secure system that evades tampering from internal and external sources and does not allow any mismanagement of audit trail data is the only sure shot for success in this endeavour.
Businesses are dynamic. A business-man will do anything to complete a sale. This includes changes in a saved bill. With audit trail implemented, any change will be an additional burden on your accounting system both in terms of storing and managing such data. It will also be the responsibility of the system to retrieve the data in a fast and systemic manner when audit analysis is undertaken. A system that allows all this without asking for additional computing power is what a businessman will seek while transitioning to an audit trail enabled system.
What should one do to maintain the data in a good condition for audit trail? What kind of actions will lead to prolonged investigations during audit trail? How do I avoid these? Moving to a new system requires complete awareness on the part of people using it on daily basis. As multiple people are involved in maintaining business records, training them, and expecting complete conformity is not possible. The system in question should be flexible, allow alterations, and should make it easy to verify such alterations during analysis.
Analysis of the audit trail and resulting actions are equally important in the compliance process. The data that is overly complicated or error-prone will make it doubly challenging to complete this activity. Further, it would not be fully ready for returns leading to departmental investigations. The data should be completely flexible to allow the process followed by the respective CA.
As all eligible businesses should implement this feature from the beginning of new financial year. Business houses should be able to learn, try, and employ. For this to happen there should be awareness of the solution and a qualified team to demonstrate the use and benefits of the solution to the people interested. A vast partner base across India and a strong digital presence is required to achieve this and to enable businesses in a short period of time.
The latest release 'TallyPrime Edit Log Release 2.1', is enhanced with the edit log feature that caters to the amendment released by the Ministry of Corporate Affairs (MCA). Following are the features of TallyPrime edit log release:
Read More About Audit Trail
Audit Trail – Meaning & Examples, Why do We Need an Audit Trail (Edit Log) for Businesses, How to Prepare your Business for Audit Trail (Edit Log) Rule, 5 Features to Look in Audit Trail (Edit Log) Accounting Software, How Audit Trail (Edit log) can Lead to Increased Compliance and Transparency
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