The Ministry of Corporate Affairs (MCA) has given businesses a year to enforce its most recent rule, which requires them to use accounting software to track all of their transactions. Businesses now have until March 31, 2022, to implement the program.
The MCA issued a directive last month requiring all companies that use accounting software to manage books of accounts to include audit trail features, which include tracking audit trails and maintaining an edit log of each change made in the books of account, as well as the date when the change was made. The audit trail can’t be turned off, either.
According to a senior government official, the rule has been postponed due to its Covid situation. “Giving businesses a year to comply would result in stronger compliance,” he said.
The majority of small businesses lack such software. Accounting software of this kind is currently in use by large corporations.
Gaurav Mohan, CEO of AMRG & Associates, said. “This will certainly improve transparency and compliance, and the significance of this cannot be overstated. However, it comes with certain drawbacks, such as the fact that real mistakes that have been corrected would still appear in logs, putting more strain on companies and auditors. No one should be able to exploit such applications, so they must be hacker-proof and tamper-proof.”
Furthermore, all businesses will use this program, and it will be cost-effective. Companies cannot be placed under excessive financial strain as a result of increased enforcement. The regulator should think about offering free or low-cost apps to anyone who follows the rules. This reform is beneficial to regulators and auditors, but its realistic implementation in terms of the software available at the ground level remains to be seen, he added.