MCA: Submission requesting for deferment of timelines for implementation of Notification No. GSR 205 (E), which require companies to adopt accounting software having the feature of audit trail

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MCA: Submission requesting for deferment of timelines for implementation of Notification No. GSR 205 (E), which require companies to adopt accounting software having the feature of audit trail

Tejasvi

@tejasvi

March 26, 2021

Public Policy

As you may be aware, Ministry of Corporate Affairs (MCA) recently issued Notification No. GSR 205 (E) dated 24th March 2021 notifying Companies (Accounts) Amendment Rules, 2021 (New Rules).

The new rules seek to insert Proviso to Rule 3(1) of Companies (Accounts) Rules 2014, which requires businesses using accounting software for maintaining books of accounts, to only use such software which has a feature of recording audit trail of every transaction, creating edit log of changes made in books of account along with the date when such changes were made and ensuring that audit trail cannot be disabled.

These changes have to be incorporated in the ERPs w.e.f. April 1, 2021, which is less than a week from the date of issuance of Notification. Including audit trail in ERPs is a business reform and not just a law change. It will involve significant changes to be made to ERP systems, which will require time for end-to-end implementation. Further, the users will also need training to adopt the concept of audit trail into their businesses. For a smooth and successful implementation of a critical business change of this magnitude, it is imperative that businesses are given adequate time to configure and test their systems from a date post where there is complete clarity regarding the process flow.

Given the above, NASSCOM made a representation to MCA on March 26, 2021 to defer implementation of Notification No. GSR 205 (E). In this regard, we also request that a time frame of at least six months be given to businesses to enable them to plan and effect changes for smooth implementation of the Notification.

We hope you will find the update useful. We will keep you posted on further developments in this regard.

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