Key Requirements of the Audit Trail (Edit Log) Rule Issued by MCA

• Key Implications of the Audit Trail (Edit Log) Notification
• Audit Trail (Edit Log) Features to Look for in Accounting Software
• TallyPrime's Upcoming Features

The Ministry of Corporate Affairs has given a year's timeline to companies to implement its latest amendment. The new rule mandates the use of accounting software that has an audit trail (edit log) feature to record all transactions and track any changes made to the same, with auditors tasked with the responsibility to review and control the same from 1st April 2022.   

As per the latest amendment, the audit trail feature should create an edit log for any changes made on transactions and record the date of each change being made and cannot be disabled.  

This would enable businesses to track all financial activities while helping to maintain transparency and detecting fraud. It would maintain an edit log of any changes made pertaining to various financial transactions, thereby improving business accuracy.  

While it is clear that the new rule helps mitigate various anomalies like unauthorized changes  and prevent fraud, as a business, you might have questions about the key requirements of the audit trail (edit log) rule. What are the major aspects that the notification emphasizes? What would be its immediate impact? Keep reading to get a deeper understanding of the new audit trail (edit log) rule.   

Key implications of the audit trail (edit log) notification

While the new rule has been implemented to bring in transparency and reduce data anomalies, mandating businesses that are using accounting software to have the audit trail (edit log) feature, here are some major aspects that notification emphasizes:  

• The accounting software that the company is using should have the capability to track each and every change made in transactions  
• It should be able to capture the dates and timelines when such changes were made  
• Further, it needs to ensure that the audit trail (edit log) cannot be disabled  
• The edit log facility is required to be operated throughout the year and can't be tampered with  
• The audit trail (edit log) is required to be preserved according to the requirement of the record retention  
• The rule also mandates CAs to certify whether the accounting software being used is compliant or not

Audit trail (edit log) features to look for in accounting software

While it has been clear that companies that fall under the purview of the MCA notifications need to have accounting software that comes with the audit trail (edit log) feature, the question that remains is what all aspects you should consider while making the shift. To answer this, here's a detailed insight into the features to look for in accounting software: 

• Timeline stamp: The audit trail (edit log) should record all the details of actions performed in the software in a date-wise manner.  
• Track all transactional changes: The accounting software should monitor and track all the changes made to the transaction and capture such details in the audit log. Essentially, the software should track and log changes right from creation to alteration to deletion of transactions.   
• Edit log shouldn't be disabled: If books of accounts are valid and the company needs to keep them, under such circumstances, the audit log should be maintained till the validity of the records.   
• Technical log vs. audit log: Under any circumstances, the audit log should not be confused with software logging. While opting for accounting software, businesses need to ensure that the system has respective logs for software issues and dedicated audit trail to remain compliant with the new rule. 
• Capture user details: The accounting software should capture username details right from creation to alteration to deletion. This would further help companies to get enhanced transparency. 
• Should provide version history and difference: To further enhance business transparency, the accounting software should be able to provide you with the version difference and allow you to compare different versions to analyze and understand what all has been changed or modified.  
• Sequential order: The audit trail (edit log) feature should capture a detailed and chronological insight of actions performed by date and time.  

TallyPrime's upcoming features

TallyPrime is going to release the edit log feature to adhere to the Ministry of Corporate Affairs (MCA) amendment. The upcoming product release is built with the following capabilities:     

• Track the edits for masters and every transaction   
• Capture the date details and username when such changes (edits) are made   
• Difference report to show the elements of the version that have been modified   
• Reports are enhanced to filter the edited transactions   
• Designed to ensure edit log feature will be enabled all the time to meet the MCA guidelines of 'Edit trail cannot be disabled.'

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, 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

Audit Trail (Edit Log) Rule in Accounting Software, Business Impact of Audit Trail (Edit Log) Rule, Audit Trail Rule (Edit Log) Applicability – Businesses who Should Follow the Rule from April 2022