MCA makes it mandatory for the Companies to use accounting software that has feature of recording audit trail which cannot be disabled

On 24.03.2021 MCA issued a notification namely (Companies (Accounts) Amendment Rules, 2021). The MCA amended certain provisions and introduced a few rules for the companies using accounting software with feature of recording audit trail via this notification.

The amendments regarding Accounting software with new feature

• This amended rules shall come in to force from 1st April, 2021.
• Every company that uses an accounting software to maintain the books of accounts, shall now use accounting software that has a feature of recording audit trail of each and every transaction.
• This means that for each financial year commencing on or after the 1st day of April, 2021, the companies shall have to use such accounting software that are able to keep a recording of audit trail of all the transactions.
• Such accounting software shall be able to create an edit log of each change that is made in the books of account specifying the date when the changes were made.
• Also, the Accounting software must be such that the audit trail can not be disabled by anyone.

Other Amendments

Apart from this, the said notification also mandated that the Board Report should contain the additional details as follows:

• Each Board report shall contain the details of the application made or any proceeding, if any, pending under the Insolvency and bankruptcy code, 2016 during the financial year.
• The status of the above mentioned proceeding as on the last date of the Financial year shall also be mentioned in the Board Report.
• The MCA also notified that the Board Report shall also contain the details of the difference between the amount of the valuation done at the time of settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof.

Download: the PDF of the MCA notification