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Govt tells companies to use software to record audit trail of each transaction

Companies must also furnish details of application made or any proceeding under the Insolvency and Bankruptcy Code, 2016, as well as the details of difference between the amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from financial institutions

twitter-logoBusinessToday.In | March 25, 2021 | Updated 11:17 IST
Govt tells companies to use software to record audit trail of each transaction

The Ministry of Corporate Affairs issued a notification dated March 24 under the Companies (Accounts) Amendment Rules, 2021 stating that for the financial year commencing on or after April 1, 2021, companies that use accounting software for maintaining its books must use software that allow it to record audit trail of each and every transaction. Companies must also furnish details of application made or any proceeding under the Insolvency and Bankruptcy Code, 2016, as well as the details of difference between the amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from financial institutions.

The rules will come to force from April 1, stated the ministry.

"They shall come into force with effect from the 1st day of April, 2021. 2. In the Companies (Accounts) Rules, 2014 - (1) in rule 3, in sub-rule (1), the following proviso shall be inserted, namely:- Provided that for the financial year commencing on or after the 1st day of April, 2021, every company which uses accounting software for maintaining its books of account, shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled," read the notification.

"In rule 8, in sub-rule (5), after clause (x), the following clauses shall be inserted namely:- (xi) the details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year alongwith their status as at the end of the financial year. (xii) the details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof," it further added. 

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