“Understand the new Companies (Accounting) Rules, 2014 amendment effective from April 2023, mandating the use of accounting software with an audit trail feature. Explore implications, compliance requirements, and the role of statutory auditors. Ensure your company’s adherence to the latest legal provisions.”
Learn about the recent amendment to the Companies (Accounting) Rules, 2014 that mandates companies to use accounting software with an audit trail feature. Discover the implications, compliance requirements, and responsibilities involved in maintaining such records.
The Companies (Accounting) Rules, 2014 have been amended to bring a very important change with effect from 1st of April 2023. In accordance with the amended rules every company is under an obligation to use the accounting software which has a feature of recording an audit trail of each and every transaction.
The provision with respect to the aforesaid audit Trail is applicable in the case of all companies including non-profit companies as well as foreign companies. As the provisions have been made applicable through the Companies (Accounts) Rules, 2014 the same are applicable only in the case of companies and non-company entities in the form of partnership firms, proprietorships or LLP are not under any legal obligation to maintain the accounts in a software with recording of audit trail.
The aforesaid audit trail would contain details of the user modifying the said entry in the books of accounts as well as details of modification carried therein. Needless to say that the date of recording of the transaction would also get reflected permanently in the software which can be accessed as and when required by any government agency.
This provision has become applicable with effect from 1st of April 2023 as a result immediate steps need to be taken to ensure the compliance. For this purpose first and the foremost is making sure that the package which is being used at present has this feature and the feature of audit trail has been activated therein. Moreover, it is imperative that the accounting record is prepared on a day-to-day basis and all transactions are recorded on a timely basis in the books of accounts. Any endeavour to record transactions of earlier dates would get highlighted and get reflected in the audit trail. Moreover, any changes made in the accounts will get duly documented in the audit Trail which would contain complete details of the original entry and the modification done therein including the person who has done the modification and the date on which the modification has been done. It obviously becomes very important to ensure that there are no errors in the data which is being recorded in the accounting software as any changes will get documented in the form of audit trail which can be accessed and utilised by the government agencies to form their opinion on the accounting record maintained by the company.
A further on this responsibility is being cast upon the statutory auditor to include the information with respect to the audit trail in its audit report of the said company. Further the company is under an obligation to maintain the audit trail for a period of eight years from the end of the financial year.
Needless to say that immediate action is required in this regard to ensure compliance of the legal provisions.
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