India MCA Audit Trail Notification: Everything You Need To Know

India MCA Audit Trail Notification: Everything You Need To Know

What is an Audit Trail?

An Audit Trail is a detailed, chronological record where accounting, project details, and other financial data are tracked and traced. It is advisable to have an Audit trail as it would verify and track all kinds of transactions, work processes, accounting details, trades in brokerage accounts etc, especially now that the MCA has made it mandatory.


MCA Notification requiring companies to maintain Audit Trail

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 -

The MCA has later announced that the above amendments will take effect on April 1, 2022, which suggests that accounting software used by businesses will have to comply with the Accounts Rules beginning in the financial year 2022-23.


5 Reasons Why an Audit Trail is Crucial for any Organization?



You are required to have an Audit Trail according to the Ministry of Company Affairs (MCA) notification dated March 24, 2021. From April 1, 2022 onwards all the accounting softwares are expected to have an inbuilt option for audit trail. Maintaining compliance with audit trail requirements can help you avoid losing business, customers and contracts. Not following up with the amendments can result in hefty penalties and fines. 


Fraud Prevention

Is your data being accessed by too many systems and users? Keeping track of all the activities is a difficult task. It takes time. Further there are many risks involved if done incorrectly. To have a track of malicious acts contempt with data and to keep digital evidence, you need to have an audit trail in place. Every incident can be traced back through the audit trail recordings, allowing fraud and process irregularities to be identified and addressed. 


Reconstruction of Events

When technical issues arise, system failure or the integrity of a file or the data is called into question. An audit trail analysis can be used to reconstruct the system's, users', and application's actions. Audit trail helps to reconstruct events after a problem has occurred and aid in the recovery process by recording changes made to reconstruct the file. Reviewing audit trails of system activity to determine how, when, and why normal operations ceased is a more straightforward way to assess the damage.


Accountability of the user

Incorporating an audit trail helps managers maintain individual accountability. It  promotes appropriate user behavior and encourages users to take personal responsibility for their actions, recorded in an audit trail. This protects the system from insufficiently used data and unauthorized database changes.


Malware / Cyber Security Risk 

Malware and ransomware attacks are on the rise. Keeping track of your audit trail can help you identify and flag instances where outsiders attempt to harm you while improving your company's information security. 


Challenges in Implementing Audit Trail
Desktop Application
Database Storage Architecture
Existing software might not be able to support it. 
Interlinkages of transaction
Location and back up


What should a good Accounting Audit Trail Feature Contain?
What happened?
When did it happen?
Who made the change?
What is the impact on the transaction?


How Gridlex’s Accounting Software Helps Maintain Accounting Transaction Audit Trail?

According to the MCA notification, the new audit trail rule in accounting software has to be implemented from 1 April 2022. All accounting software used by businesses must comply with the MCA notification. Gridlex has been consulting with industry experts, chartered accountants and other professionals to understand better and evaluate the Audit Trail since the notification was sent out. After the research study, we added the Audit Trail feature to Gridlex's AI Accounting Software.


Gridlex’s Sky Accounting software has the following Audit trail features:


Gridlex AI Accounting Software provides a very well-functioning audit trail feature that can cover a wide range of industries and organizations. So, if you're looking for secure accounting software with an audit trail feature, try Gridlex AI Accounting Software.


You can contact Gridlex at and on the phone or WhatsApp: +91-90303-10303