The CA Institute has issued an implementation guide that is expected to come in handy for its members as regards the government’s move to require all companies from April 1 this year to use only accounting software having “audit trail” features. 

It maybe recalled that the Corporate Affairs Ministry (MCA) had mandated the implementation of this norm for transactions put through for financial year beginning April 1, 2023.

The CA Institute’s implementation guide clarifies that an auditor is not required to assess appropriateness of audit trail of previous years and the assessment will be applicable for prospective periods for financial years commencing on or after April 1,2023.

The implementation guide clarifies that the primary responsibility for maintenance of audit trail is that of the management, Sanjeev Singhal, Chairman, Auditing and Assurance Standards Board (AASB), ICAI told businessline. 

Internal control

He said that an auditor needs to carry out certain audit procedures for reporting.  The guide also lays importance to having internal controls relating to audit trail, AASB Chairman said. 

Singhal said that the guide clarifies that an auditor is required to report whether the audit trail ( edit log) facility has operated throughout the year for all transactions recorded in the accounting software.

The guide also provides illustrative reporting in case of both standalone and consolidated financial statements, he added. 

MCA had initially in March 2021 mandated every company that uses accounting software to maintain its books of accounts to only use software that has the feature to record audit trail of each and every transaction put through after April 1. However, later this timeline was deferred to April 1, 2023.

Also, companies have been mandated to create edit logs of each change made in account books with the proper dates. As per the MCA’s rule amendments, companies must ensure that the audit trail is not disabled.

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