Beginning this FY, companies must keep an audit trail

New accounting regulations mandate that companies must maintain a complete and uninterrupted record of all changes made to their financial statements and are prohibited from deactivating the audit trail feature in their accounting software, starting from this fiscal year.

The Companies (Accounts) Amendment Rules, 2021, have been modified twice to give businesses additional time to comply with the audit trail requirement. Companies must record an audit trail of all transactions and changes made, along with the date of the change, in order to verify the integrity of financial information. Failure to comply with these regulations could result in investigations by regulatory authorities. The government has been increasing requirements for financial transparency and improving company governance, including mandating the disclosure of material accounting policies and addressing concerns around auditors’ independence.