Microsoft Dynamics 365’s audit trail feature empowers you with audit trail capabilities and a strong internal control system. Though the mandatory order rule has been deferred by a year, are you equipped?

The Ministry of Corporate Affairs, India (MCA) recently deferred by a year its mandatory audit trail order rule. As per this mandate, beginning April 1, 2022, all businesses that are currently using an accounting software for maintaining books of accounts need to ensure that their software includes an ‘audit trail’ feature, comprising the following capabilities:

  • Recording an audit trail of every transaction
  • Creating audit log of each change made in the books of accounts
  • Capturing the date and user details of every edit
  • Ensuring that the audit trail cannot be disabled 

Audit trail: Meaning and significance

Before we move any further, it is important to understand what an audit trail is and why the Indian Government is pushing for it. An audit trail is defined as a step-by-step sequential record, which provides evidence of the documented history of financial transactions to its source. This helps trace every step of the financial data of a particular transaction right from the general ledger to its source document.

This is significant as it helps improve both transparency and compliance across the books of accounts maintained by businesses, leveraging which the Government can better track, penalize, and discourage fraudulent changes in accounting entries.

Compliance deadline

This rule which was originally set to be effective from April 1, 2021 has been pushed by a year, and will now come into effect from the next financial year starting April 1, 2022. The deferral allows businesses to adapt to this change while also providing software providers with more time to ensure that their solutions comply with the new rule.

Impact and options

Well, if you are running a business, you have about a year to plan and adopt a solution that is fully compliant with the new audit trail regulation.

One of the best solutions in this regard is the Microsoft Dynamics 365 suite of business applications. The solution is pre-equipped with capabilities to meet the Indian audit trail requirements. In addition, it complies with regulations laid out by many other countries. So, irrespective of whether you are a local business or a multi-national and multi-currency entity, this offering from Microsoft is likely to be a good fit for you.


Currency options are available for more than 25 countries in Microsoft Dynamics 365

Microsoft Dynamics 365’s audit trail feature

This feature is a part of the general ledger reports in the reports module. This not only empowers you with the four must-have audit trail capabilities (mentioned at the start of this blog), but also provides you with a strong internal control system in the context of implementing SoD (Segregation of Duties) in the system to flag transactions which are in violation of the organization’s internal controls. Your management thus gains complete confidence that is essential in financial and regulatory reporting.

These features, which have been a part of Microsoft’s ERP and CRM applications since the beginning, provide a robust framework not only to meet the new requirement of audit trail but to also cater to other demands of internal controls in terms of user security roles, work-flow management, audit logs, Segregation of Duties, email notifications, alert rules, and more.

Easy access to audit trail feature in Microsoft Dynamics 365

Capabilities deep dive

Microsoft Dynamics 365 maintains a log of every change that is made to a record in the application, be it a contact, a sales and purchase transaction, an invoice or bill, a journal, or even a functional setting. In addition, depending on the nature of the change, the solution records the time when the change happened along with the details of the user who performed that change.

In short, the audit trail in Microsoft Dynamics 365 provides details on the 4Ws:

When – The date and time an action/change was performed.

Where – The module/table under which the action was performed. This could be across invoices, bills, bank feeds, expenses, or any other module/table field under the Microsoft Dynamics 365 database.

What – A description of the action/change that was performed, such as creating an invoice, editing line items on the invoice, or updating the contents of a bill.

Who – The user who performed the action/change.

The audit trail in Microsoft Dynamics 365 is essentially a system generated number that cannot be tampered with for any posted transaction. Once posted, a transaction cannot be deleted either. Further, any reversal of previously posted transactions generates a new audit trail for change tracking.

If a record is changed multiple times, the audit trail shows every version that has been created, and not just the most recent one. This allows a user to compare multiple versions and track specific data that has been added, removed, or modified.


With over 30+ years of experience, has the capabilities required to help your business transition to the Microsoft Dynamics 365 platform, ensuring that you meet the new regulatory requirement in the shortest time possible without any disruption to your daily business processes.

We have helped companies worldwide in achieving their business objectives including rapid time to value through the implementation of the Microsoft platform. Explore our customer stories to know more.


What next?

Write to us for a free business consultation. Alternatively, explore about the feature-rich Microsoft Dynamics 365.