Companies Act, 2013

Audit Trail (Edit Log) Feature Mandatorily Applicable on Companies from 1-4-2023

CS. Amit Baxi

The Government has not extended the date for implementation of Audit Trail Feature. Therefore from 1-4-2023 every company is mandatorily required to have a Audit Trail feature in its accounting software.

Some important points in this regard are:

1. Audit Trail in Accounting Software of Companies is applicable with effect from 1-4-2023 (from F.Y. 2023-24 and onwards).

(This feature was originally planned to be effective from 1-4-2021 but later on, it was deferred).

2. It is Applicable to every company which uses accounting software for maintaining its books of account. No exemption is given to any class of company.

3. Accounting Software should be capable to --

-- Track each and every change made in transactions;

-- Create the edit log of changes made;

-- Ensure that the audit trail (Edit Log) cannot be disabled.

4. The companies have to ensure that no backdated entries are passed, no voucher deleted/ amended or modified. The accounting team must adopt this behavior in the strictest manner possible. It is advisable not to continue old books for F.Y. 2023-24. 

5. The statutory auditors are mandatorily required to comment in their Statutory Audit Report (for audit to be conducted for F.Y. 2023-24) that whether such feature is in place or not.

6. All companies are required to get their accounting software updated with these features so as to comply with the above requirement.