KB112: Audit Trail Feature In Microsoft Dynamics 365 Business Central

Audit trail feature in Microsoft Dynamics 365 Business Central

KB112: Audit Trail Feature In Microsoft Dynamics 365 Business Central

KB112: Audit Trail Feature In Microsoft Dynamics 365 Business Central 1600 900 Shrutidhara

Under the Companies (Audit & Auditors) Amendment Rules, 2021, It is now mandatory for the Companies to have audit trails & transaction logs in their accounting software from 1st April,2021.

The recent notification issued by the Ministry of Corporate Affairs stated that “Every Company which uses accounting software shall use only such systems that possess a feature of recording audit trail for transactions and are able to create logs of changes made to the books of accounts ensuring that the audit trail cannot be disabled.” This is a significant step aimed at promoting more corporate transparency, increasing accountability & curbing frauds as well as unrecorded transactions. However, there is a lot of apprehension & lack of clarity among businesses regarding the modalities of this latest move by the Government.

In this blog, we discuss about audit trail and its importance. We also explore how organizations can conform to the new rules by opting for Microsoft Dynamics 365 Business Central (MSD365BC) as their preferred ERP Solution.


Audit trail can be defined as a step-by-step procedure for tracking all the activities related to the financial transactions. It offers a detailed history of the financial transactions that occur in an organization like the type of transactions, date, time, user information etc.

Audit trail help organizations in maintaining transparency & operational integrity. It validates their actions & ensures audit compliance. Not only this, but it can also be used by organizations for assessing their current financial health, future budget forecasting & planning , risk management and so on.


Microsoft Dynamics 365 Business Central has an edge over the other ERP software’s as it keeps all the relevant data related to the historical financial transactions of an organization intact in the integrated database. This empowers the organizations by facilitating proper traceability, ensures better compliance & enables them to maintain their audit trail easily & accurately.



It is the basis of an organization’s financial system. It is a register of debit and credit entries. It stores all the financial data in a structured manner for creating the financial statements. It streamlines the financial processes & keeps an organization well-informed in terms of its revenues, assets, liabilities etc.


It is an index of all the financial data stored in the General Ledger. Organizations can track their transactions in these accounts by adding segments known as “Financial Dimensions” such as department, cost center, Purpose and so on. At the same time, the user defined rules known as “Account Structures” and “Advanced Rules” help organizations in determining how financial dimensions are connected to the main accounts and the other financial dimensions, and how these transactions are being entered in the system.


It is the foundation of audit trail in Microsoft D365 Business Central. It is an extremely crucial feature and indicates where an entry was created.  In MSD365BC, organizations can create entries in financial statements by posting journals, orders, invoices, or credit memos, and executing various batch jobs. And all the posted entries are automatically assigned a source code. Each posting type has a specific source code that is assigned when individual entries are created.  This helps the organizations in tracing every transaction to its origin.


It is used for defining & changing source codes. It encompasses of several Fast Tabs, one for each application area. Each Fast Tab comprises of the source codes that are applicable for that application area. Usually, the default source code setup is not changed. However, if a different source code identification is required, the changes can be made from the Source Code Setup page. This provides the organizations with operational flexibility.


It supplements the source code and indicates why an entry was created. Organizations can assign reason codes on individual entries. They can also assign permanent codes to specific journal templates and journal batches. When a reason code is linked to a journal line or a sales or purchase header, all entries are marked with the reason code when they are posted. Additionally, when the invoice is posted, the reason code is copied to each general ledger, customer, and vendor entry. This allows posted ledger entries to be filtered by reason code & provides better financial visibility.


It encapsulates and records the vital information regarding all types of data changes. It allows the organizations to list changes in a chronological order and arrange the financial data in columns indicating identifiers, changes made and dates. The changes are recorded in the log once a user’s session expires. This enables the organizations to track the source of errors in the data or changes to the data. It also facilitates sharing of precise & reliable financial information. With MS D365BC, organizations can generate reports on various changelog activities that can be used for a better understanding of key financial data. These reports can easily be exported to Excel or Word documents.


 Like the Change Log Entries, it includes important information about each change such as – Date and time, User ID, Source Code, Journal batch name, Entry Numbers that correlate G/L Registers entries with the actual general ledger. It also enables the organizations to generate & export reports for a quick peek at important financial data.

Simply put, Microsoft Dynamics 365 Business Central (MSD365BC) is a comprehensive business management solution for connecting operations across small or medium size business. It empowers organizations by offering an integrated database, AI-powered insights, and seamless integration of modern technologies. By keeping the financial data related to historical financial transactions intact in the system, it enables organizations to maintain their audit trail in an efficient manner. At the same time, it also allows them to monitor their financial performance effectively & make more profitable financial decisions.

Our team at Dhyey works round the clock to assist businesses in their growth journey. If your company is looking for ERP services in Vadodara or anywhere in India or around the globe, drop us an email at enquiry@dhyey.com. Our team will be glad to set up a free demo for your brand.