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Requirement of the accounting software* having a feature of audit trail has been incorporated as a proviso to Rule 3(1) of the Account Rules and have been prescribed only in the context of books of account**. This is evidenced by the fact that as per the proviso to the Rule, the accounting software
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FAQ :
The applicability of the Account Rules, including the audit trail requirements, commenced on or after April 1, 2023.
Any software that maintains records or transactions falling under the definition of 'Books of Account' as per Section 2(13) of the Companies Act, 2013, is considered accounting software for this rule.
Auditors must verify if the audit trail feature is configurable, was enabled throughout the year, covers all transactions, and has been preserved as per statutory record retention requirements.
If books of account are maintained entirely manually, the assessment and reporting responsibility under Rule 11(g) regarding audit trails will not be applicable. The auditor should report this as a statement of fact.
Companies must preserve their audit trails for a minimum period of eight years, in line with the requirement to preserve books of account under Section 128(5) of the Act.
Auditors should obtain written representations from management confirming the establishment and maintenance of adequate controls for audit trails, the adequacy of their evaluation procedures, and disclosure of any control deficiencies.
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