MCA mandates Companies to use Software with Audit Trail of each Transaction

Auditing Software

The Ministry of Corporate Affairs (MCA) notified that 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.

The Government notified the Companies (Accounts) Amendment Rules, 2021
which seeks to amend Companies (Accounts) Rules, 2014.

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.

Firstly, the details of an application made or any proceeding pending
under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the
year along with their status as at the end of the financial year.

Secondly, the details of difference between the amount of the valuation
done at the time of one time settlement and the valuation done while
taking loan from the Banks or Financial Institutions along with the
reasons thereof.”

The notification shall come into force with effect from the 1 April,
2021.

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