XBRL
The MCA (Ministry of Corporate Affairs) has issued circulars mandating certain companies to file their financial statements from the year 2010-11 using an XBRL (eXtensible Business Reporting Language) format. These circulars mark an important step in ensuring XBRL compliance for financial statements and related information filed by Indian companies and are part of a series of XBRL initiatives by various regulators. In the initial phase, the MCA mandate applies to:
- All companies listed in India and their Indian subsidiaries; or •
- All companies having a paid up capital of INR 5 crores and above; or •
- All companies having a turnover of INR 100 crores and above.
Exemptions:Banking companies, insurance companies, power companies and Non Banking Financial Companies (NBFCs) are currently exempt from the filing requirements.
Scope: The scope of filing covers the entire annual financial statements, the directors’ report and the auditors’ report. The XBRL taxonomy (dictionary) is based on the existing Schedule VI of the Indian Companies Act, and the currently prevailing Indian Accounting Standards. Accordingly, XBRL implementation does not change any requirements relating to preparation of the financial statements, but merely reflects a change in the manner in which the financial statements will be transmitted to the regulators.
What is XBRL: Currently, financial statements or other information prepared in Word, Excel or HTML formats can be read but not automatically analyzed or processed according to the user’s needs. For example, the word “Revenue” appears in many places in the financial statements, but if the reader wants to have all “Revenue” references and related information collated in one place, they would need to do so manually. This is because information is not machine-readable and needs to be copy/pasted or keyed-in before it is used for analysis/decision making purposes. XBRL enables source data to be tagged electronically, making the data machine-readable. Thus, the user’s computer can automatically extract the information without the need for copy-pasting or keying-in. XBRL enables tagging of numbers, quantitative data and textual information. The benefits of XBRL go beyond compliance since any data collation process can be streamlined using electronic tags.
How data becomes XBRL-compliant: XBRL makes the data machine readable, with the help of two documents – taxonomy and XBRL instance document. Taxonomy defines the elements and their relationships. Using the relevant taxonomy, a company can map data and create an XBRL document.
Experts Involvment: Conversion process involves expertise knowledge and experience of highly competent professionals like Company secretaries, Chartered Accountants etc.
Due date/ Last Date of Filing of ROC returns:
Financial Statements i.e. Balance Sheet, Profit and Loss Account and Cash Flow Statement in the form AOC4-XBRL should be filed within 30 days from the date of AGM.
How WE can assist: WE in India’s dedicated Corporate Advisory Services practice provides Corporate, Financial and accounting advisory services to clients across industry sectors. Our team includes professionals with experience in accounting and financial reporting principles and processes, including XBRL. Additionally, we have access to alliance partners who provide software tools to implement XBRL. WE, along with its alliance partners, can assist Indian companies in training internal resources on XBRL, identifying and selecting appropriate software tools, project management and overall implementation of XBRL in a manner that makes XBRL ‘business as usual’