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For any business to protect itself against fraud or future mismanagement, there needs to be a meticulous record kept of the financial and operational activities done. When a point of contention arises, the audit trail can immediately be referred to and the facts verified. This helps not only the company itself not be cheated but also to prove that it has everything above board in case of an external or governmental audit.
Auditing and logging are terms that are often confused with each other and practically used interchangeably. There is a subtle difference between the two, however. Let us take a look at the differences.
Auditing follows the actions recorded in the log to determine that no deviation from the expected outcome has occurred. In case of a problem, it can trace back the logs to determine the source which led to the problem.
Logging is the recording of every activity done by the user in sequence. This also includes the effects of the activity performed by the user.
Auditing refers to the activities on the user level, such as changes in data made by a user being recorded against their name and the time it was made. This is specifically actions taken by an end-user which are causing changes in the records
Logging also mostly involves a record of the activities that the system itself does at the back end while completing user actions
All the businesses that fall under the purview of MCA and are using accounting software for maintaining books of accounts should have an audit trail feature comprising of the following:
In simple words, the expectation is to maintain the edit log of every transition right from recording to tracking the changes that may take place.
The 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.
|5 Features to Evaluate Audit Trail Accounting Software|
An audit trail must lead the auditor back from the point of discrepancy to the creation of the record. This includes activities such as changes made by the users to the database, attempts to access data, activities by the administrator or user.
The main contents which are relevant to an audit trail are the actual events that happened, the trigger that caused that event and the timing of the event. The depth to which the audit trail will go depends on the granularity of the data that is recorded.
Logging is a time-consuming and sometimes expensive process. It should be considered as insurance in case something goes wrong. As long as certain records are valid and the company requires to keep them, the audit logs should be maintained for the duration of the validity of the records. In an ideal scenario, audit logs should be maintained continuously and endlessly.
Audit trails are used in some capacity in almost every industry. May it be records of financial transactions, logging keystrokes and user activity within a server or a system, the websites visited on a browser, the IP addresses pinged and so on. All types of industries have different ways of tracking their activities to ensure they have a record. Even educational institutions need to keep records of the students that graduate through them for future reference, clinical research needs to log the progression of results to determine if progress is being made.
A commonality between all businesses regardless of their nature is keeping track of the financial transactions which ultimately reflect as a profit or loss on the bottom line. For this, all of them must keep a meticulous record of transactions related to assets, liabilities, cash receipts, payments, etc. Audit trail as a tool plays a key role in tracking transaction events such as edits, deletion, etc. and helps in keeping the books clean.
An audit trail itself is the fundamental record that can be leveraged in different ways depending on the situation. A company can use it to protect itself from fraud and other liabilities. It can prove that it has not done anything illegal to stay clear of legal trouble. It can also show investors and consumers that it is going strong and raise its profile in the market. It can also assess the risks it can afford to take by having a clear picture of their books.
In a computerized world, the audit trail is mostly monitored by the IT department, which traces any contact with sensitive data from any user, human or system generated. The user’s information will become part of the audit trail. In a broader sense, especially log related to books of accounts is used by the auditor, business owner or any person in the business who is responsible to find the reason that caused a discrepancy, if any.
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, 5 Features to Look in Audit Trail (Edit Log) Accounting Software, Audit Trail – Edit Log the New Statutory Watch Guard for Businesses, How Audit Trail (Edit log) can Lead to Increased Compliance and Transparency
Audit trail rule
, Business Impact of Audit Trail (Edit Log) Rule, Key Requirements of the Audit Trail (Edit Log) Rule Issued by MCA, Audit Trail Rule (Edit Log) Applicability – Businesses who Should Follow the Rule, How to Prepare your Business for Audit Trail (Edit Log) Rule
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