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Why XBRL

23 Jun
XBRL : New Language for Financial Reporting
  • Mandatory for some companies to file Balance sheet in XBRL format from FY 2010-11.

Why XBRL

  • Annual Reports of cos. prepared in several ways.
  • Horizontal/ Vertical Presentation.
  • No standardization for Schedules, Annexures, Grouping.
  • Makes analysis difficult.
  • Re-entry time consuming, prone to errors
XBRL : The Solution

eXtensible Business Reporting Language – A new reporting language

  • New Global Standard of Financial & Business Reporting.
  • Powerful & flexible version of XML.
  • Accounting framework neutral.
  • Software Independent.
XBRL in India
  • Presently, banks are submitting some liquidity returns etc. to RBI in XBRL.
  • It is mandatory for top 100 companies in India to report their quarterly results etc. to BSE & NSE in XBRL.
  • Local jurisdiction of XBRL International.
Filing under MCA
  • Till now e-forms & pdf attachments.
  • Mandatory XBRL filing in a phased manner.
  • Based on XBRL Taxonomy for existing Schedule VI.
  • Applicable from FY 2010-11.
  • Phase I : Applicable to
    • Listed Companies
    • Subsidiaries of Listed Cos
    • Unlisted Cos. With Paid up capital >= Rs. 5 crore.
    • Unlisted Cos. with Turnover >= Rs 100 crore.
  • Exclusions :
    • Banks
    • NBFCs
    • Insurance Cos
    • Power Cos
    • Overseas Subsidiaries of above.
XBRL – Role of Professionals
  • Practising CA/CS/ICWA to certify integrity of Balance Sheet, Profit & Loss account filed in XBRL format.
  • Wikipedia: Concept of consistency of actions, values, methods, measures, principles, expectations & outcomes.
  • Data Integrity : data w’th complete or whole structure.
  • Tagged financial statements accurate & consistent with traditional format.
Benefits for Auditor
  • Works towards totality : more meaningful.
  • XBRL reduces sampling.
  • Continuous / Concurrent Audit.
  • Real time information in XBRL.
  • Easy access to original source document: individual tag from where data is coming.

Documentation for tagging

  • An accounting professional is the best judge regarding the selection of correct account head.
  • The same knowledge also helps him in selecting the right standard name of any account head (element) in taxonomy for any account head in balance sheet or profit & loss account (label).
  • Incorrect selection leads to inaccurate results and analysis. For big corporates, there should be proper documentation for tagging.
  • In the initial years, this can be a good assignment for professionals.
Inference

XBRL has arrived in India in a big way. Change is never welcome. But our past experience shows that many times change has been for the better. MCA 21, E-filing of TDS, Income tax & VAT returns were looked upon as a burden initially. But later on they made the job of professionals much simpler, leaving them with more time for important tasks. XBRL is also expected to benefits all the stakeholders.

 

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