The Audit Trail feature in Tally software to do Tally Audit has become a critical compliance and monitoring tool in India, especially for companies falling under MCA’s mandatory audit requirements. This article will explain what audit trail is, who needs to comply, how it works in Tally, and how it empowers auditors and business owners to trace changes in financial records.
🔍 What is Audit Trail in Tally?
The Audit Trail, also referred to as an Edit Log, is a system-generated log that tracks every change made to accounting entries, including creations, modifications, and deletions. It captures:
- User activity
- Date and time of edits
- Original and modified data
- Reasons for edits (if specified)
It ensures transparency and traceability in bookkeeping, enhancing internal control and audit-readiness.
✅ Is Audit Trail Mandatory?
Yes, as per Ministry of Corporate Affairs (MCA) Notification (effective 1st April 2023):
| Applicability | Details |
|---|---|
| Applicable For | Companies registered under the Companies Act (excluding OPCs & small cos.) |
| Effective From | Financial Year 2023–24 |
| Software Requirement | Must use accounting software with Audit Trail/ Edit Log enabled |
| Compliance | Mandatory to maintain unalterable logs of all entries |
🔍 Key Features of Tally Audit
| 🔑 Feature | 💡 Functionality |
|---|---|
| User Activity Tracking | Tracks the user ID, date, and time of every change made to vouchers |
| Alteration Detection | Flags any modifications made to original entries |
| Audit Listings | Displays all unaudited vouchers for easy navigation |
| Filter by Voucher Type | Helps auditors drill down into specific journal, payment, or receipt entries |
| Audit Trail Report (TallyPrime Release 2.1+) | Enables official audit trail reports to meet regulatory requirements |
| Data Locking | Prevents further changes to entries after audit completion |
⚙️ How Does Tally Audit Work?
✅ Basic Flow:
- Enable Tally Audit in security settings.
- Assign audit privileges to selected user roles.
- Other users create or alter vouchers.
- The auditor logs in and checks the Audit Listings.
- Any modifications will appear with:
- User Name
- Time of Alteration
- Original Entry vs. Altered Entry
- The auditor can either Accept, Reject, or Comment on each item.
🛠️ How to Enable Audit Trail in Tally Prime?
TallyPrime (from Release 2.1 onwards) includes the Audit Trail feature natively. Here’s how to activate it:
🔧 Step-by-Step Activation:
- Open Tally > Gateway of Tally
- Go to
F11: Features > Accounting Features - Enable:
Use Edit Log: YesEnable Edit Log for Backdated Transactions: Yes
- Save and restart Tally to apply changes.
🧠 Once enabled, audit logs cannot be disabled, ensuring compliance.
📁 What Information Does Audit Trail Record?
| Action Tracked | Data Captured |
|---|---|
| Creation of Vouchers | Date, time, user name, voucher type and amount |
| Edits or Modifications | Before and after values of all changed fields |
| Deletion of Entries | Date, user, and voucher ID deleted |
| Backdated Changes | Specific backdated modifications highlighted |
| User Info | Login ID, timestamp, and audit trail reference |
📊 Chart: Who Uses Tally Audit?
- Authorizes the audit process
- Creates and edits vouchers
- Reviews all unaudited entries
- Accesses audit reports for compliance
📈 Benefits of Using Tally Audit
| ✅ Advantage | 🔍 Details |
|---|---|
| Enhanced Data Integrity | Flags every change, ensuring transparency |
| Saves Time in External Audit | Internal checks make CA audits more efficient |
| Prevents Fraud | Unauthorized alterations are quickly caught |
| Easy Reconciliation | Differences in amounts or entries are tracked and resolved |
| Ensures GST & Tax Compliance | Helps identify improper voucher treatments |
| Regulatory Readiness | Fulfills MCA-mandated audit trail requirements for companies |
🧑💻 Can Data Entry Operator Manipulate Audit Trail?
No. Once the Edit Log is enabled, the log becomes immutable. Even Tally administrators cannot alter or delete the logs.
- Tally encrypts the audit trail in internal system files.
- Tampering attempt results in data corruption warnings.
- Each change is permanently logged, ensuring traceability.
🛡️ Security Tip: Restrict access using role-based login credentials and avoid sharing admin passwords.
🧾 Comparison: Tally Without vs. With Audit Feature
| Aspect | Without Audit | With Tally Audit |
|---|---|---|
| Voucher Alteration | Cannot be traced easily | Fully traceable with history |
| Unauthorized Entries | Hard to detect | Immediately highlighted |
| Audit Trail Availability | Not available | Automatic audit trail report |
| External Audit Preparation | Time-consuming | Much faster with internal checks |
| Legal Compliance | At risk | Aligned with regulatory mandates |
🧠 Common Mistakes to Avoid
- ❌ Not assigning audit rights to the right user
- ❌ Forgetting to lock periods after audit completion
- ❌ Ignoring flagged alterations
- ❌ Confusing audit trail with manual backups
📄 Reports Required by Auditors from Audit Trail
Auditors typically ask for the following:
| Audit Trail Report | Purpose |
|---|---|
| Voucher Edit Log Report | Tracks financial entry modifications |
| Master Edit Log | Shows changes in Chart of Accounts (ledgers, groups) |
| Backdated Entry Report | Identifies non-sequential, risk-prone entries |
| Deleted Transactions Log | Verifies if key records were removed |
Auditors use this data to:
- Check for fraud or internal manipulation
- Verify consistency and accountability
- Assess control environment
- Identify high-risk periods or users
🔓 Can Audit Trail be Bypassed?
Technically no, if enabled properly.
However:
- Using older versions of Tally (pre-2.1) won’t track edits.
- Enabling the feature mid-year may lead to incomplete logs.
- Manual journals outside the system (Excel, etc.) are unlogged.
🔒 Once enabled, the Edit Log is non-reversible in latest TallyPrime versions.
📌 Pro Tips for Maximum Audit Efficiency
| 🛠️ Tip | 💡 Why It Matters |
|---|---|
| Use strong user-role segregation | Prevents unauthorized access or misuse |
| Lock periods post-audit | Avoids backdated alterations after review |
| Conduct weekly audit checks | Helps detect changes early |
| Maintain backup before major audits | Ensures rollback capability if discrepancies arise |
🔒 Tally Audit Trail Mandate (Companies Act Compliance)
As per recent guidelines, companies using accounting software like Tally must maintain:
- Edit logs
- Audit trail of every change
- No option to disable audit logs
TallyPrime’s audit feature is fully compliant with the Ministry of Corporate Affairs (MCA) guidelines introduced in April 2023.
💰 Estimated Cost to Incorporate Audit Trail Feature
| Expense Head | Estimated Cost (INR) |
|---|---|
| Tally Prime License (Single User) | ₹18,000–22,000 |
| Auditor Edition or Multi-User | ₹54,000+ |
| Installation & Setup (Optional) | ₹1,000–5,000 (varies by vendor) |
| Training for Staff (Optional) | ₹3,000–10,000 |
🔐 Login Access Required for Audit Trail
| User Role | Access Level |
|---|---|
| Tally Admin | Full access (enable, view, export logs) |
| Data Entry Operator | Cannot view or export logs |
| Auditor Login (Auditor Ed.) | View-only access to edit logs, master changes |
| Restricted Roles | Can be configured to limit permissions |
🧾 Summary Table
| Feature | Details |
|---|---|
| Full Name | Audit Trail / Edit Log |
| Introduced By | MCA (Ministry of Corporate Affairs) |
| Mandatory From | 1st April 2023 |
| Software Requirement | Accounting software with non-editable logs |
| Available In Tally Prime? | Yes (from Release 2.1 onwards) |
| Tracks | All creation, modification, deletion of entries |
| Export Options | Available in Display > Edit Log > Export |
| User Restrictions | Data Entry Operators can’t view or tamper |
| Benefit | Enhances audit readiness and transparency |
🔗 Internal Links from TaxCrux
🌐 External References
MCA Notification on Audit Trail
📚 Conclusion: Why Every Business Should Use Tally Audit
Tally Audit isn’t just a feature—it’s a financial control powerhouse that ensures your business runs ethically, accurately, and efficiently. It provides the audit trails, transparency, and regulatory compliance your organization needs in an increasingly scrutinized financial landscape.
For businesses using TallyPrime, enabling the Tally Audit feature is a no-brainer. It acts as your internal watchdog, providing the accountability and insights required to stay compliant and confident.
❓ FAQs on Audit Trail in Tally
1. Is audit trail compulsory for all businesses?
Only for companies registered under Companies Act, excluding OPCs and small companies.
2. Can I enable audit trail mid-year in Tally?
Yes, but it will not track previous changes made before enabling the feature.
3. Can auditors rely solely on audit trail?
Yes, but it should be supported by other reports like financial statements, ledgers, etc.
4. Is it possible to disable audit trail after enabling?
No, once turned on in Tally Prime 2.1+, it’s irreversible.
5. How often should businesses review the audit trail?
At least monthly or quarterly, and mandatorily before audit or finalization.
6. Can I undo or delete an audited voucher?
Once a voucher has been audited and the period is locked, further modifications are restricted. However, if not locked, users with proper permissions can edit, and such changes will be logged again.
7. What is the difference between Audit Trail and Tally Audit?
Tally Audit refers to the internal audit mechanism in TallyPrime, whereas Audit Trail (as per MCA guidelines) refers to a detailed log of all voucher edits — which TallyPrime now supports as part of its compliance features.
8. Does Tally Audit work with all voucher types?
Yes, it works across all voucher types including payments, receipts, journal entries, and sales/purchases. The auditor can filter the audit listings by voucher type for better navigation.
9. Can I customize audit reports in Tally?
Yes, TallyPrime provides customizable audit reports with filters such as user-wise changes, voucher type, date range, and status (audited/unaudited).
10. How often should a Tally Audit be conducted?
For best results, it’s recommended to perform a Tally Audit weekly or monthly, depending on the size and transaction volume of the business.
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