The second amendment to the Companies Accounts Rules, 2014, made the previous changes effective from April 1, 2022, according to the notification.
The ministry had made the changes, to be effective from the start of the current fiscal, with the objective of curbing backdated entries by firms in the books of accounts.
“…for the financial year commencing on or after the 1st day of April, 2021, every company which uses accounting software for maintaining its books of account, shall use only such accounting software which has a feature of recording 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 and ensuring that the audit trail cannot be disabled,” the amendment made on March 25, said.
While larger firms already used such softwares, the amended rules would largely impact smaller firms, experts said.
If the new rules had come into effect in the current fiscal as earlier envisaged, the firms would have to gear up their accounting software to enable audit trails, increasing the compliance burden and costs.
The changes were expected to improve internal controls as each change would be logged as a fresh transaction, preventing manipulation of the original transaction at a later date, according to experts.