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Home / Value Added Advisory / Audit Trail Services
Last updated: 2 October 2026
Since 1 April 2023, every company that keeps its books in accounting software must use software that records an audit trail of each change, and the audit trail cannot be disabled. We help you check whether your software and processes meet the rule, document the controls, and prepare for the auditor’s reporting under Rule 11(g).
The proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 applies from the financial year beginning 1 April 2023. A company that uses accounting software must use software that records an audit trail of every transaction, creates an edit log of each change made in the books with the date of the change, and ensures that the audit trail cannot be disabled.
The statutory auditor must report on this under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014: whether the software had the feature, whether it operated throughout the year for all relevant transactions, whether it was tampered with, and whether it was preserved as required. Books of account and related records must be kept for at least eight years under section 128(5).
Rule 3(5) also requires backups of books kept in electronic form to be maintained on servers physically located in India on a daily basis.
Based on section 128 of the Companies Act, 2013, Rule 3 of the Companies (Accounts) Rules, 2014 and Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014. Last updated: 27 September 2026.
Financial year beginning 1 April 2023
Proviso to Rule 3(1), Companies (Accounts) Rules, 2014
Every change, with the date, in an edit log
Disabled by users
Rule 11(g), Companies (Audit and Auditors) Rules, 2014
At least eight years (s.128(5)); daily backup on servers in India
The auditor must report on the audit trail in the audit report. Gaps found at year end are hard to fix retrospectively.
Each system that holds books of account is identified and checked, not just the main ledger.
A short note records the software, settings, access rights and backup arrangement.
Records are organised for the independent auditor, who reports under Rule 11(g).
Related advisory services.
A wider review of ROC and statutory compliance.
Ongoing compliance through the year.
Board processes and internal controls.
Review of records before investment or acquisition.
We list every system used to maintain books of account.
Each system is checked for audit trail, edit log and whether it can be disabled.
User rights, change controls and daily backups on servers in India are reviewed.
Gaps are listed with options: settings changes, upgrades or process controls.
A controls note is prepared for management and the auditor.
Records are shared with the independent auditor for their reporting.
Keeping the audit trail compliant through the year:
Confirm the feature stays on after software updates or migrations.
Access rights are updated as staff join or leave.
Daily backup records are retained.
The controls note is updated before the audit.
Share your query and our team will reply during business hours.
Every company that maintains its books of account in electronic form using accounting software, from the financial year beginning 1 April 2023.
Spreadsheets generally do not maintain an edit log that cannot be disabled. Companies using spreadsheets for books of account should discuss this with their auditor and consider suitable software.
The company’s statutory auditor, under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014. The auditor is independent; we help prepare the records.
If those systems maintain books of account or feed transactions into them, they should be reviewed as well.
The rule is under the Companies Act and applies to companies. LLPs follow the LLP Act and rules, and good practice is to keep a similar edit log.
ACS – Director, Expertvuw Management Pvt Ltd
Advisory and company secretarial work is handled by Expertvuw’s team. Audits, certifications and representation that the law reserves for Chartered Accountants, advocates or other licensed professionals are provided by independent professionals engaged for your case.