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The MCA has notified the Companies (Accounts) Second Amendment Rules, 2022. As per the amendment notification, the MCA has extended the implementation of Audit Trail software to a financial year commencing on or after April 1, 2023, earlier such provision was applicable from April 01, 2022.
An audit trail is a step-by-step sequential record that provides evidence of the documented history of financial transactions to its source. An auditor can trace every step of, the financial data of a particular transaction right from the general ledger to its source document with the help of the audit trail.
An audit trail encourages the user for better accountability and compliance, protects against fraud, improves security, and above all, the right information reaches the public domain.
The objective of mandating the requirement of an audit trail feature in accounting software was to mitigate the chances of fraudulent transactions or manipulation in the books of accounts of the company and to bring in more transparency.
Source: Notification No. G.S.R. 235(E), Dated: 31.03.2022
Hope the information is useful.
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