The Ministry of Corporate Affairs has finally begun action on the audit trailing mandate. MCA sources suggest that the deadline for the same won’t be extended now and that the process of audit trailing has started already from this fiscal year. The original order for audit trailing, also known as edit log, was put out by MCA on March 24, 2021. However, deadlines for the same were extended on multiple occasions.
The audit trail is basically a record of all changes made to any company's financial statements. According to the MCA notification, the trail must be maintained for at least eight years. The MCA had last extended the deadline for implementing the audit trail to April 1, 2023.
The Auditing and Assurance Standards Board (AASB) of the Institute of Chartered Accountants of India (ICAI) has put out an Implementation Guide to give the members the necessary direction on this new reporting obligation.
“This is a relevant move by MCA to bring in higher levels of process integrity in maintenance of books of accounts by companies. Icai as a regulatory body is committed to support steps that strengthen governance frameworks . It’s a welcome move and will help increase transparency. ICAI has also issued an implementation guide in relation to auditors responsibility in this regard,” says CA Aniket Talati, President , ICAI.
An audit trail is a list of all the data modifications that have been done throughout these eight years. Any alteration to data, including newly added, updated, or deleted data, must be documented.
The new rules for audit trailing were brought under the “Companies (Audit and Auditors) Amendment Rules, 2021″ by the Ministry of Corporate Affairs. The new rules are aimed at enabling businesses to track all financial activities with transparency and detect frauds in time.
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