In this guide · 9 sections
- What the law requires, and since when
- Which Tally meets the rule
- Set-up for the client's accountant: do this before the next voucher
- The quick check at the client's desk
- Back-dated entries: what the log shows
- When the log was off for part of the year
- Preservation: eight years, inside the company data
- FAQs
- Sources
- From 1 April 2023, every company that keeps its books in accounting software must use software that records an audit trail of each change and where the audit trail cannot be disabled (proviso to Rule 3(1), Companies (Accounts) Rules, 2014). There is no exemption for small companies.
- In Tally, only TallyPrime Edit Log (Release 2.1 onwards) keeps the log on with no option to switch it off. Standard TallyPrime has the same Edit Log, but it can be enabled and disabled. Tally.ERP 9 has no Edit Log at all.
- The auditor reports under Rule 11(g) whether the edit log operated throughout the year, was not tampered with and has been preserved. If the log was off for even part of the year, the comment is modified, and ICAI says this must also be considered under s.143(3)(b) and (h).
- The quick check at the client: Alt+K > Edit Log for enable, disable, repair and migration events; then open the first voucher of the year and press Alt+Q. If it shows no log, the log was not running.
- The edit log lives inside the company data. Keep the old company folders and backups for eight years (s.128(5)). Exporting and importing into a fresh company does not carry the log across.
Try SignReady: The report draft asks for Rule 11(g) every year it applies, so it is not missed.
Start freeAsk a small company's accountant whether Tally's edit log is on and you will often get "I think so". For the auditor, "I think so" is not enough. Rule 11(g) makes the auditor say, in the audit report, whether the audit trail ran for the whole year, whether it was tampered with, and whether it has been kept. If the log was switched off in November, or the company only moved off Tally.ERP 9 in July, the report has to say so. This article covers what the law requires, which Tally products meet it, how the client should set it up, and the quick check a CA can do at the client's desk. A CA can send it straight to the client's accountant. Law and Tally help pages as at October 2026.
What the law requires, and since when
- The company — proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014. From financial years starting on or after 1 April 2023, a company keeping its books in accounting software must use software that records an audit trail of every transaction, logs each change with its date, and whose audit trail cannot be disabled. Inserted by G.S.R. 205(E) of 24 March 2021; deferred by G.S.R. 247(E) of 1 April 2021 and G.S.R. 235(E) of 31 March 2022.
- The auditor — Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014, inserted by G.S.R. 206(E) of 24 March 2021. The auditor reports whether the software had the feature, whether it operated throughout the year for all transactions, whether it was not tampered with, and whether the audit trail has been preserved. FY 2023-24 was the first year of substantive reporting; for FY 2022-23 auditors stated that the clause did not apply (IG para 30).
ICAI's Implementation Guide on Reporting on Audit Trail under Rule 11(g) (Revised 2024 Edition) adds:
- No size exemption. Small, private and public companies alike (FAQ 1). Only books kept entirely by hand fall outside, reported as a fact (para 16).
- Quiet months are no excuse. No transactions in April to June? The log still had to be on (FAQ 6).
- Management's representation is not enough. The auditor has to do audit procedures (FAQ 16).
- Other reporting is affected. A modified Rule 11(g) comment must also be considered under s.143(3)(b) (proper books) and s.143(3)(h) (FAQ 24).
For the other clauses, see the Rule 11 auditor's report checklist.
Which Tally meets the rule
Tally Solutions added Edit Log in TallyPrime Release 2.1 and sells it as two products that use the same licence. The difference is whether the log can be switched off:
| Product | Edit Log | Meets the proviso to Rule 3(1)? |
|---|---|---|
| TallyPrime Edit Log (Release 2.1 or later) | Always on. There is no option to disable it, and the log cannot be deleted from the company data. | Yes. Tally says only this product meets the audit trail compliance requirement. |
| TallyPrime (Release 2.1 or later) | Optional. An admin user who can alter the company can switch it on or off. Repairing the data after switching it off erases the existing log. | No, on Tally's own reading: the proviso asks for an audit trail that cannot be disabled. ICAI notes that much software lets the audit trail be switched on and off and asks the auditor to test the controls over that setting (IG para 23); that evidence shows whether the log operated all year, not whether the software meets the proviso. |
| TallyPrime 2.0.1 or earlier | None | No |
| Tally.ERP 9 | None. Tally.ERP 9's older TallyAudit feature is a different feature, not an edit log. | No. Tally's help says Tally.ERP 9 users need to migrate the company to TallyPrime Edit Log. |
In standard TallyPrime the log is enabled at Alt+K (Company) > Alter, F12 (Configure) > Set Edit Log applicability: Yes, then Enable Edit Log: Yes. That turns it on but does not stop anyone turning it off. For a company, the answer is TallyPrime Edit Log; moving data between the two products is a migration, and it is recorded.
Set-up for the client's accountant: do this before the next voucher
- Install TallyPrime Edit Log on every machine and server that opens the company. Standard TallyPrime cannot open the same data without a migration, which then shows in the log.
- Give each person their own user. Enable security and create one user per person, so the log shows who changed what (the user-wise summary needs security on). ICAI lists unshared user IDs among expected controls (para 20).
- Restrict back-dated entries and alterations through user roles, as Tally's FAQ suggests.
- Voucher numbering. For voucher types set to Automatic, Tally recommends Automatic (Manual Override). With plain Automatic, one deletion renumbers every later voucher, and each gets a new log version.
- Other software. If billing, payroll or inventory software posts entries straight into Tally, it needs its own audit trail (IG para 11; FAQ 25). A workings spreadsheet keyed in by hand does not.
- Backups. The log sits inside the vouchers and masters. It survives backup, restore and split; it is lost with corrupted records and not carried by export and import. Keep backups, including the daily backup on a server physically in India that the Companies (Accounts) Rules require (as amended by G.S.R. 624(E), 5 August 2022; IG FAQ 18).
Switching it on in October does not cover April to October; this year's comment is modified either way. Do it today so next year's can be clean. A monthly look at the Edit Log fits well into a 30-minute month-end close.
SignReady's report draft asks for the audit trail clause in every year it applies and gives ICAI's unmodified wording, with the preservation sentence from FY 2024-25. Where the log was off for part of the year, write your own modified wording in its place.
The quick check at the client's desk
Before any detailed testing, four steps tell you where you stand:
- Which product? TallyPrime Edit Log is a separate product with its own name. Check the product name on each machine that opens the company, not just the desktop icon: Tally notes that on Windows 11 an install updated from TallyPrime can keep the old icon.
- Alt+K (Company) > Edit Log. Activities Affecting Edit Log lists migration, repair and split, and in standard TallyPrime every enable or disable. A "disabled" event in the year, or a repair after one, is what Rule 11(g) asks about.
- The first voucher of the year. Open the first voucher of April in alteration mode and press Alt+Q (Edit Log). If the voucher was altered later, press F9 (All Versions), because by default only the altered versions show. You should see version 1, Created, with a date and time in April (and a username, if security is on). Vouchers entered while the log was off, or before migration, show no data. Repeat for one voucher a quarter.
- Alt+G (Go To) > Edit Log Summary – Voucher Types. This shows how many vouchers of each type were altered, with deleted vouchers in brackets. Press F5 to see all vouchers.
Record what you saw, with screenshots and the date, in your working papers. Tally does not let you print or export a voucher's Edit Log, so screenshots are the evidence. Add ICAI's Rule 11(g) representations to the management representation letter (IG para 34).
Back-dated entries: what the log shows
The log records when each change was made, not just the voucher date:
- A journal dated 31 March 2026 but created on 18 May 2026 shows Created with the date and time of 18 May. Audit-time provisions look like this and are expected; an unexplained back-dated sales or cash entry is not.
- Moving a voucher's date, say from April into March, is logged as an alteration.
- In the Edit Log Summary, F2 (Period) filters by voucher date and F8 (Version Period) filters by the date of the change. Set the period to the year, set the version period to start after year-end, and in Ctrl+B (Basis of Values) set Show Report for to All Vouchers. By default the summary shows only altered and deleted vouchers, so vouchers created after year-end but dated in the year would be left out. Compare with the first trial balance you got (see what changed in a revised trial balance).
- Deleted vouchers keep their log. In the Day Book, Ctrl+B (Basis of Values) > Include Deleted Vouchers lists them. Many deleted cash or sales vouchers near year-end go on the year-end query list.
If the log shows something that could be fraud, ICAI asks the auditor to link the Rule 11(g) reporting with fraud reporting under s.143(12) or clause 3(xi) of CARO 2020, as the case may be (IG para 32).
When the log was off for part of the year
Example: a private company used Tally.ERP 9 until 30 June 2025 and moved to TallyPrime Edit Log on 1 July 2025. It recorded 3,600 vouchers in FY 2025-26: 820 in April to June and 2,780 from July to March. Activities Affecting Edit Log shows the migration on 1 July; the 820 first-quarter vouchers have no log. The audit trail did not operate throughout the year.
| Situation found | Rule 11(g) comment | Also consider |
|---|---|---|
| TallyPrime Edit Log for the whole year, no repair or migration events, log present on the sample | Unmodified (IG para 28), with the preservation sentence from FY 2024-25 | — |
| Tally.ERP 9 (or Edit Log disabled) for part of the year, as in the example | Modified: the feature did not operate from 1 April to 30 June 2025 | s.143(3)(b) and (h) (FAQ 24) |
| Standard TallyPrime with the log on all year | Judgement, leaning to modified. If Activities Affecting Edit Log shows no disable or repair event and access to Company alteration was restricted, you may conclude the log operated all year (IG para 23). But the proviso to Rule 3(1) asks for software whose audit trail cannot be disabled (IG paras 8, 11), and ICAI says non-compliance with Rule 3(1) calls for a modified comment (FAQ 1). Say in the comment that the software allows the audit trail to be disabled, and get the client onto TallyPrime Edit Log | s.143(3)(b) and (h) if you modify |
| Tally.ERP 9 all year | Modified: no audit trail feature | s.143(3)(b) and (h) |
| Moved software during the year and you cannot get enough evidence | Unable to comment (IG para 31, example 5) | s.143(3)(b) and (h) |
Adapted from ICAI's illustration, the comment might read: "Based on our examination, which included test checks, the Company has used an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility, except that for the period from 1 April 2025 to 30 June 2025 the books were maintained in a software that did not have this feature. For the period from 1 July 2025, the audit trail feature has operated for all relevant transactions recorded in the software, and we did not come across any instance of the audit trail feature being tampered with." Add the preservation sentence, which covers the audit trail kept for earlier years. As in FAQ 24, make the s.143(3)(b) statement "except for" the Rule 11(g) matter and refer to it under s.143(3)(h). Dates are not required (FAQ 12) but make the comment factual.
A modified comment is not by itself a qualified opinion (ICAI asks you to evaluate its effect on the opinion, para 31), and a missing audit trail is not necessarily a material weakness in internal financial controls (para 33). Judge the effect on the opinion and on s.143(3)(i), where it applies.
Preservation: eight years, inside the company data
Section 128(5) requires books of account to be kept for at least the eight financial years immediately before the current year. ICAI applies this to the audit trail from 1 April 2023 (para 19); the preservation sentence is reported from FY 2024-25. In Tally:
- Keep the old company folders, not just a final trial balance. Each year's log sits only in that year's company data.
- A new company built each year by export and import starts with no log; keep the old one unchanged.
- Migrating from Release 2.1 or earlier to Release 3.0 or later creates a new company with a 6-digit number and leaves the old 5-digit company as it was; keep that old folder too.
- A company split keeps the log in both parts and is recorded, so it is the safer way to start a year.
- Do not "repair" data to save space. In standard TallyPrime, repairing with the log disabled erases the log. In any product, a repair is an event the auditor will ask about.
To test preservation, open the FY 2023-24 company and press Alt+Q on a few vouchers.
Try SignReady: Second review flags an audit trail paragraph with missing elements.
Start freeFrequently asked questions
Is the audit trail mandatory for small companies?
Yes. The proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 applies to every company that uses accounting software, from 1 April 2023. ICAI's Implementation Guide on Rule 11(g) (FAQ 1) confirms there is no exemption for small companies. The only case where it does not apply is books kept entirely by hand.
Can the edit log be disabled in TallyPrime?
In TallyPrime Edit Log (Release 2.1 or later), no: it is always on and its data cannot be removed. In standard TallyPrime it is optional and can be switched on or off from the company alteration screen, which is why Tally says only TallyPrime Edit Log meets the audit trail compliance requirement.
Does Tally.ERP 9 have an audit trail for Rule 11(g)?
No. Edit Log is available only from TallyPrime Release 2.1. Tally.ERP 9's TallyAudit is a different feature. A company still on Tally.ERP 9 needs to migrate to TallyPrime Edit Log; until then the auditor's Rule 11(g) comment is modified.
What if the edit log was switched on only in the middle of the year?
The audit trail did not operate throughout the year, so the Rule 11(g) comment is modified for the period it was off. ICAI's Implementation Guide (FAQ 24) says this must also be considered in reporting under section 143(3)(b) and (h).
How long must the audit trail be kept?
At least eight financial years, in line with section 128(5) of the Companies Act, 2013, counted from 1 April 2023. In Tally, the log is stored in the company data, so the old company folders and their backups must be kept.
Sources
- ICAI — Implementation Guide on Reporting on Audit Trail under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (Revised 2024 Edition), paras 3, 8, 11, 16, 19, 20, 28–34; FAQs 1, 6, 12, 16, 18, 24, 25
- MCA — Companies (Accounts) Amendment Rules, 2021, G.S.R. 205(E), 24 March 2021 (proviso to Rule 3(1)); deferred by G.S.R. 247(E), 1 April 2021 and G.S.R. 235(E), 31 March 2022
- MCA — Companies (Audit and Auditors) Amendment Rules, 2021, G.S.R. 206(E), 24 March 2021 (Rule 11(g)); G.S.R. 248(E), 1 April 2021
- Companies Act, 2013 — sections 128(5) and 143(3) (India Code)
- Tally Solutions — TallyHelp: Edit Log in TallyPrime
- Tally Solutions — TallyHelp: Edit Log in TallyPrime – FAQ
- Tally Solutions — TallyHelp: Edit Log Summary
- Tally Solutions — TallyHelp: Edit Log for masters and transactions
- Tally Solutions — TallyHelp: Create Company in TallyPrime (Set Edit Log applicability, Enable Edit Log)
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Version history: 25 Oct 2026 — first published.
