We wish to bring to your attention the recent government update regarding the maintenance of an audit trail for all transactions by companies starting from 1st April 2023. This new rule has been introduced to enhance transparency in financial reporting and prevent any tampering with accounting entries.
The government notification, which was initially released two years ago, is finally being enforced after being postponed twice. Additionally, it is now mandatory for companies to maintain an edit log of any changes made in their books of account.
According to the aforementioned provisions, every private limited company that maintains its books of account electronically must ensure that their software has the feature of recording an audit trail for each transaction, creating an edit log of every change made in the books of account, and ensuring that the audit trail cannot be disabled, starting from 1st April 2023.
The introduction of this feature will have a significant impact on accounting practices. Below are a few of the key effects:
The audit trail feature, along with the edit log, is already available in Tally Prime (but not in Tally ERP9) and must be enabled by the accountant. The implementation of this feature will only require the installation of additional software.
This feature will record all backdated entries, including any alterations made to a specific entry. For example, if an expenditure entry is made in March 2023 but pertains to April 2022, a record will be maintained of the date the entry was made (March 2023) and the actual period to which it pertains (April 2022).
In essence, we are entering an era where we must install a CCTV camera in our accounting systems to comply with government regulations and enhance financial transparency.
As the deadline for the implementation of this software is rapidly approaching, we urge you to ensure that your accounting software is updated to comply with this requirement
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