As per the notification issued by the Ministry of Corporate Affairs (MCA) on March 31, 2022, the deadline for using accounting software with an audit trail recording feature has been extended until April 1, 2023. Previously, the deadline had been set for April 1, 2022. The same is now applicable from 1st April 2023.
By revising The Companies (Audit and Auditors) Rules, 2014, the government had included a new clause “g” that was earlier decided to be effective from April 1, 2022.
Clause “G,” asks whether the company has used such accounting software for maintaining its books of account in financial years beginning on or after April 1, 2022 (presently April 1, 2023), that has a feature of recording audit trail (edit log) facility and that has been used throughout the year for all transactions recorded in the software, and that the audit trail feature has not been tampered with and that the audit trail has been preserved by the company in accordance with the statute.
The clause will apply to all types of businesses. The provision requires that accounting software be implemented in the organization with the ability to create an audit trail, i.e., such software must be capable of maintaining an edit log.
This measure was put in place by the government to improve the entire system’s transparency and accountability. It should be noted that while audit reports are typically valid for one year, audit trails must be kept for at least eight years.
Radium Box believes that such software will dramatically improve corporate governance in India by increasing openness, accountability, and eventually the degree of corporate governance.