Why Embrace the Concept of Audit Trail in Bookkeeping?
A less travelled path also has footprints somewhere or the other which leads the traveller to its destination sooner or later. But what if the path is heavily travelled?
The destination might seem easy but counting and analysing each and every step might not be easy to fetch from those numerous feet. The advanced tech helps us edit anything and everything and the records of each and every edit can be fetched but need technical expertise.
Similarly, the world of bookkeeping, through accounting software, goes through several changes and edits on daily basis even after being strongly controlled through the developed technology.
But then what about the records of those changes?
According to The Indian Ministry of Company Affairs (MCA) notification dated March 24, 2021 (Companies (Accounts) Amendment Rules, 2021), for the financial year beginning on or after April 1, 2021, every company that uses accounting software to maintain its books of account shall use only Accounting Software that has a feature of recording an –
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.
Ensuring that the audit trail cannot be disabled.
Current Update: The MCA has later announced that the above amendments will take effect on April 1, 2023, as per the amended provisions vide Companies (Accounts) Second Amendment Rules, 2022.
How do you as a business get benefitted from the concept of Audit Trail?
1.Compliant Books: An audit trail can help by providing evidence that your business has followed established procedures and that the books are demonstrating its compliance with regulations, laws, and industry standards further avoiding penalties and fines.
2.Transparency makes accountability easier: Trust is what every stakeholder expects the business to radiate and without crystal clear records of each and every transaction in books, the trust factor might never get room. An audit trail helps the business gain and maintain trust.
3.Fraud caught at the thought: Corrective actions come into the frame when a company can identify irregularities, anomalies, and suspicious behaviours. An audit trail can help detect and prevent fraud by providing a record of all transactions and activities.
4.Risks get managed well: Identification of potential issues is always a better option than solving it after it becomes the bone in the throat kind of problem. An audit trail helps in the identification of such risks and can also provide evidence to support insurance claims or legal disputes.
RealBooks, your compliant cloud accounting partner has always tried its best to keep the books appropriate at all times. We followed the MCA notification even before 2021 and have helped YOU keep the records of all when, what, whom and where of all transactions.
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