The ministry of corporate affairs has issued a notification making it mandatory for the companies to record audit trail of each and every financial transaction done on their accounting software.
Going forward, from April 1, every company that uses an accounting software for maintaining its books of accounts will have to mandatorily ensure creating an edit log of each change made along with the date when such changes were made.
They will also have to ensure that the audit trail cannot be disabled. The notification was issued by the ministry of corporate affairs late yesterday evening.
Experts say the move will help curb back-dating of transactions.
CA Rajat Mohan, partner, AMRG and Associates said, "It is now the responsibility of companies to ensure that the audit trail is practically invincible, and the same cannot be disabled."
"This change will disincentivise the backdating of entries in books of accounts and ensure that the corporate sector maintains books of accounts in true and correct manner," Mohan added.