Content…
- Govt. Notification on Audit Trail
- What is the purpose of the Audit Trail?
- What exactly is an audit trail, and how does it benefit businesses?
- Benefits of Audit Trail
- Key Implications of Audit Trail (Edit Log) Notification
- Audit Trail (Edit Log) Features to View in Accounting Software
- Features Included in SwilERP for Audit Trail (Edit Log)
- Wrapping Up
Govt. Notification on Audit Trail
The Ministry of Corporate Affairs had given a year’s timeline to companies to implement its latest amendment in accounting software to use the audit trail (edit log) feature. This year, it was decided to make the audit trail mandatory for private limited companies from 1 April 2022.
But vide Notification Dated 31 March 2022 by MCA announces that it has extended the due date for applicability of Usage of accounting software having feature of recording audit trail.
Audit Trail applicability due date is now extended to 1 April 2023. This is relief news for companies that have not yet been able to adopt the audit trail system.
What is the purpose of the Audit Trail?
When you manage a business, you have to deal with a lot of transaction data. Multiple modifications must be made to these data, and managing them might be tough.
Your work gets significantly easier if you have the right system that streamlines your transaction process and records every update made to a transaction. Adopting an audit trail does the same thing. It keeps track of all transactions and modifications are done.
You can say that the goal behind this amendment is to move towards a more transparent economy.
All businesses who are using accounting software must ensure that the software is equipped with an audit trail feature. Every transaction performed through the software must be logged in an audit trail, ensuring that transactions are verified and accurate.
What exactly is an audit trail, and how does it benefit businesses?
An audit trail is a system that tracks the complex transactions associated with each item in a financial record. It keeps track of any changes made to your transactions and documents your transaction history, from the time the transaction was initiated to the most recent amendment.
It provides,
- Complete documentation of the edit log for your transaction
- Display the time and date of the change
- Mention the person who made the modification.
- Improve tax compliance by making it more visible.
This way, you’ll be able to detect the source of the issue in your company transactions. You’ll be able to uncover inconsistencies, avoid internal fraud, and identify the individual responsible for any transaction modifications.
Additionally, accurate financials may help you strengthen your business position, winning greater trust from investors and making it easier to obtain loans.
Benefits of Audit Trail
- Improve tax compliance
- Reduce tax evasions
- Reduce mismanagement of funds
- Maintain transparency
- Detect Fraud
- Improve business accuracy
- Creates reliable documentation of your business activities
- Improve business efficiency & security
Key Implications of Audit Trail (Edit Log) Notification
This new guideline (audit trail) has been implemented in order to increase visibility and minimize data anomalies. Accounting software users must use the audit trail (edit log) feature. The following are some of the key points highlighted in the notification:
- The company’s accounting software should be able to trace any change in transactions.
- It should be able to record the dates and timings of any modifications.
- It also has to make sure that the audit trail (edit log) can’t be disabled.
- The edit log facility must be used at all times of the year and cannot be tampered with.
- The audit trail (edit log) must be kept in accordance with the record retention requirements.
- The rule also requires CAs to certify whether or not the accounting software is compliant.
Audit Trail (Edit Log) Features to View in Accounting Software
Knowing what aspects you should consider in your accounting software to use the audit trail (edit log) feature is essential. Let us get into the detailed information about the features required for accounting software:
Edit log shouldn’t be disabled.
If the accounting records are valid and the company needs to keep them, the audit log should be kept until the records are no longer valid.
The accounting software has a timeline stamp.
The audit trail (edit log) should keep track of all activities taken in the software on a date-wise basis.
The software should track all transactional changes.
All modifications to the transaction should be monitored and tracked by the accounting software, which should then be recorded in the audit log. (from transaction creation through modification to deletion)
The software has a feature to capture user details.
The accounting software should capture username details right from creation to alteration to deletion.
The software should differentiate technical log vs audit log.
The audit log should not be mixed up with program logging under any circumstances. Businesses must ensure that accounting software includes appropriate records for software issues and a dedicated audit trail to comply with the new guidelines.
Features Included in SwilERP for Audit Trail (Edit Log)
SwilERP now has an edit log function complying with the Ministry of Corporate Affairs (MCA) latest amendment. The features of the SwilERP edit log release are as follows:
- SwilERP ensures that the Edit Log feature will be enabled at all times to meet the MCA guidelines of ‘Edit Trail cannot be disabled’.
- It tracks the masters and edits of each transaction.
- It captures the date details and username when any changes (edits) are made.
- It provides a different report to show the elements of the modified version.
- With SwilERP, the report can be extended to filter edited transactions.
Wrapping Up
Having an audit trail can help your business to a great extent. With these steps in place, SwilERP enables you to manage your finances efficiently. You can get your business audit-ready in no time.
Don’t hesitate to contact our SWIL team for additional information. The team will be able to assist you more efficiently to get the best accounting software in India.
