WHAT IS XBRL ?????????????? : A MUST READ ....NOW

[anesh patil]

XBRL
XBRL-eXtensible Business Markup Language in INDIA
1) Why the need of XBRL?
Today’s regulators are not challenged by Technology, but by enomority
of data. For MCA (Minstry of Company Affairs), it is more than 60
e-forms, 100s of data fields, 850000 companies and cores of pages of
PDF documents & attachments. The complexity with respect to processing
& analysis of e-data before different Regulators viz., SEBI, RBI & MCA
& IT department are montrous. Internationally, XBRL is the proved to
be an effective solution.
2) Notification by MCA?
MCA has mandated certain class of companies (refer below) to file BS &
P/L alongwith Director’s Report and Auditor’s report for the year
2010-11 onwards by using XBRL Taxonomy vide circular no.9/2011 dated
31/3/2011 and circular no. 25/2011 dated 12/05/2011.
Coverage in Phase 1:
The following class of companies have to file the financial statements
in XBRL form only from the year 2010-11
1) All companies LISTED in India and their Indian subsidiaries.
2) All companies having a paid up capital of INR 5 Crore and above
3) All companies having a turnover of INR 100 crore and above.
However banking companies,insurance companies, power companies and
NBFC are exempted for XBRL filing till further orders.
Additional Fee exemption for Phase 1 companies above. In other wards,
whose BS are ADOPTED in the AGM held before 30th Sept 2011 are
permitted to file upto 30th Sept 2011 without any additional fee. If
AGM hel in Septemeber month then they will file the BS within 30 days
from the date of adoption in AGM as per section 220 of Companies
Act,1956.
The SEBI has introduced Clause 52 in the equity listing agreement,
requiring listed companies to file information with the exchange only
through Corporate Filing and Dissemination System (CFDS)
a XBRL-enabled common platform for listed companies to fi le such
information, statements and reports as may be specifi ed by BSE and
NSE in a phased manner like MCA.
Now question comes,
3) What is XBRL?
Like telugu is local language, Hindi is national language & English is
international language similarly XBRL is Business Reporting Language.
It encompasses financial reporting. Extensible means usability,
adaptability & flexibility in reporting
language. XBRL is set to become the standard way of recording, storing
and transmitting business financial
information. XBRL is simply a language for transmitting information.
It must accurately reflect data reported under different standards –
it does not change them. Any entity can use XBRL to encode its
business information such as fi nancial statements,annual reports, tax
returns and so forth. XBRL is a member of the family of languages
based on XML, or Extensible Markup Language, which is a standard for
the electronic exchange of data between businesses and on the
internet. Under XML, identifying tags are applied to items of data so
that they can be processed efficiently by computer software. It
basically provides a standard mechanism for computers to understand
and compare fi nancial data. It basically provides a standard
mechanism for computers to understand and compare fi nancial data.
XBRL also does not change or add to IND-AS & SEBI fi nancial reporting
disclosure requirements; it is strictly a method of transmitting fi
nancial information in a
way that leverages computer technology. The idea behind XBRL is
simple. Instead of treating fi nancial information as a block of text
- as in a standard internet page or a printed document - it provides
an identifying label (tag) for each individual line item of data. This
is computer readable. XBRL increases the re-usability of fi nancial
statement information. Eventually the need to re-key fi nancial data
for analytical and other purposes should be virtually eliminated. This
has the potential to reduce manual errors, and give companies the
ability to proof and control their own data.
Despite all this XBRL is not a substitute for the fi nancial
accounting systems, controls,procedures, and related managerial
oversight required to prepare GAAP compliant financial statements.
Now then XBRL how managed in India?
XBRL-India (an ICAI initiative) is a Company registered under Section
25 of Companies Act, 1956, incorporated for managing the affairs of
Indian Jurisdiction of XBRL International. XBRL International is
comprised of Jurisdictions which represent countries, region or
international bodies and focus of XBRL in their area. XBRL Indian
Jurisdiction is an established Jurisdiction of XBRL International.
How efiling with regulators done at present and how it will be after
XBRL implementation?
*EDIFAR- Electronic Data Information Filing And Retrieval System.
EDIFAR is discontinued by SEBI with effect from 1st April 2010 and a
new portal has come i.e. CFDS (Corporate filing & Disemination
System).
*ORFS—Online Reporting Filing System of RBI efiling portal where
commercial banks /FI/authorized dealers & NBFC etc files their
returns.
*ACES—Automation of Central Excise & Service tax of CBEC (Central
board of excise & service tax) . Here Central excise returns & service
tax returns are e filed.
What are the potential uses of XBRL?
XBRL can be applied to a very wide range of business and financial
data. Among other things, it can handle:
§ Company internal and external financial reporting.
§ Business reporting to all types of regulators, including tax and
financial authorities, central banks and governments.
§ Filing of loan reports and applications; credit risk assessments.
§ Exchange of information between government departments or between
other institutions, such as central banks.
§ Authoritative accounting literature – providing a standard way of
describing accounting documents provided by authoritative bodies.
A wide range of other financial and statistical data which needs to be
stored, exchanged and analysed.
What are the benefits to a company from putting its financial
statements into XBRL?
XBRL increases the usability of financial statement information. The
need to re-key financial data for analytical and other purposes can be
eliminated. It will also meet the requirements of regulators, lenders
and others consumers of financial information, who are increasingly
demanding reporting in XBRL. This will improve business relations and
lead to a range of benefits.With full adoption of XBRL, companies can
automate data collection.
For example, data from different company divisions with different
accounting systems can be assembled quickly, cheaply and efficiently.
Once data is gathered in XBRL, different types of reports using
varying subsets of the data can be produced with minimum effort. A
company finance division, for example, could quickly and reliably
generate internal management reports, financial statements for
publication, tax and other regulatory filings, as well as credit
reports for lenders. Not only can data handling be automated, removing
time-consuming, error-prone processes, but the data can be checked by
software for accuracy.
Where to get software to use/create XBRL?
Several software vendors are developing such tools in India and the
companies are free to choose the one that suits them to create XBRL
document.
Does XBRL benefit the comparability of financial statements?
XBRL benefits comparability by helping to identify data which is
genuinely alike and distinguishing information which is not
comparable.
Now question comes how MCA compliance be done with the use of XBRL,
1) XBRL ‘instance document’ creation software has to be purchased from
the software vendors in the market. This software is used to create
XBRL instance documents that would be uploaded on the MCA portal.
MCA21 system shall provide a facility for validation of the instance
document and filing of the same. MCA is not recommending any specific
XBRL software.
NOTE: Existing Form 23AC and 23ACA shall continue to be there for
filing by companies to which XBRL filing is not applicable; and for
filing of earlier year’s documents.
2) How to retype ‘Notes to Accounts and Statements’ in XBRL format?
This shall be catered by the XBRL instance document creation software
NOTE: Subsidiary of listed company is required to file in XBRL format,
irrespective of its paid up capital.
STEPS for filing Financial statements in XBRL form in MCA 21 system
Overview:
Step 1 – Creation of XBRL instance document:
Step 2 – Download XBRL validation tool from MCA portal
Step 3 – Use the tool to validate the instance document
Step 4: Perform pre-scrutiny of the validated instance document through the tool
Step 5: Attach instance document to the Form 23AC and Form 23ACA
Step 6: Submitting the Form 23ACA and Form 23ACA on the MCA portal
In summary:
A. Map company’s each financial statement element to a corresponding
element in published taxonomy
Companies have the option to create their own XBRL documents in house
or to engage a third party to convert their financial statements into
XBRL form.
The first step in creation of an instance document is to do tagging of
the XBRL taxonomy elements with the various accounting heads in the
books of accounts of the company. This would create the mapping of the
taxonomy elements with the accounting heads so that the accounting
information can be converted into XBRL form.
Mapping is the process of comparing the concepts in the financial
statements to the elements in the published taxonomy, assigning a
taxonomy element to each financial statement concept.
Selecting the appropriate elements for some financial statement
elements may require a significant amount of judgment. For that reason
those in the company who are most familiar with the financial
statements should be involved in matching financial statements
concepts to taxonomy elements. The mapping should be reviewed before
proceeding further as the complete reporting would be dependant on the
mapping.
B. Create instance document for Balance sheet and Profit and loss Account-
Once the tagging of financial statement elements with the published
taxonomy elements is done, the next step is to create the instance
document. An instance document is a XML file that contains business
reporting information and represents a collection of financial facts
and report-specific information using tags from the XBRL taxonomy.
Separate instance documents need to be created for the following:
(i) Stand Alone Balance sheet of the company
(ii) Stand Alone Profit and Loss Account of the company
(iii) Consolidated Balance sheet of the company
(iv) Consolidated Profit and Loss Account of the company
The instance document should contain the financial information for
both the current as well as the previous financial year.
Step 2 – Download XBRL validation tool from MCA portal
There shall be a tool provided at the MCA portal for validating the
generated XBRL instance document. Validating the instance document is
a pre requisite before filing the balance sheet and profit & loss
account on MCA portal. You are required to download the tool from the
MCA website and validate the instance document before uploading. There
shall also be a facility to view and search the taxonomy.
Step 3 – Use the tool to validate the instance document
Once the tool has been downloaded, the next step is to validate the
instance document. The following validations shall be performed by the
tool-
§ Validating that the instance document is as per the latest and
correct version of taxonomy prescribed by MCA
§ All mandatory elements have been entered
§ Other validations as per taxonomy
Step 4: Perform pre-scrutiny of the validated instance document through the tool
§ Once the instance document is successfully validated from the tool,
the next step is to pre-scrutinise the validated instance document
with the help of the same tool. For pre-scrutinizing the instance
document, a working internet connection shall be required. In the
Pre-scrutiny, the server side validations (i.e. validations which are
to be validated from the MCA21 system) shall be performed.
§ Also, there shall be a feature provided in the tool to verify the
appearance of the generated XBRL instance document using the built in
Viewer. It is imperative that the company should use this feature to
verify the accuracy of the instance document.
Step 5: Attach instance document to the Form 23AC and Form 23ACA
§ There shall be a separate set of Form 23AC and Form 23ACA available
on the MCA portal for filing in XBRL form. First fill up the Form 23AC
and Form 23ACA. Thereafter, attach the validated and pre-scrutinised
instance document for Balance sheet to Form 23AC. Similarly, the
instance document for Profit and Loss account is to be attached to
Form 23ACA. Separate instance documents need to be attached w.r.t.
Standalone financial statements and consolidated financial statements.
Step 6: Submitting the Form 23ACA and Form 23ACA on the MCA portal
§ After the forms are filled, you are required to perform pre-scrutiny
of the form, sign the form and then upload the same as per the normal
eForm filing process. It shall be validated that the attached instance
documents are validated and pre-scrutinised from the XBRL validation
tool.
Viewing of balance sheet and profit and loss submitted in XBRL form on
MCA portal:The XBRL instance documents submitted along with Form 23AC
and 23ACA are in machine readable format. Therefore, for viewing the
same in a human readable format, these shall be converted into human
readable format by the MCA21 system. For viewing the same on MCA21
portal and for taking certified copies of the same, these converted
documents shall be made available.
GLOSSORY:
Taxonomy:is an electronic dictionary of the reporting concepts. It’s a
rule book as well as a year book (will be updated annually as
regulations are updated). It is a classification listing, a catalogue,
nomenclature or categorization of elements of financial/business
statements.
Taxonomies may represent hundreds or even thousands of individual
business reporting concepts, arithematical
and definition a l relationships among them, along with text labels in
mu l t i p l e languages, references to authoritative literature, and
information about how to display each concept to a user. Banks,
Insurance, NBFC, etc., will be subjected to distinctive taxonomies.
Taxonomies are based on the regulatory requirements and standards
which are to be followed by the companies. Accordingly, depending on
the requirements of every country, there will be country-specifi c
taxonomies. Public taxonomies such as the MCA’s Final Taxonomy and
Business rules for XBRL reporting cannot always meet the precise needs
of every individual fi nancial report. For this reason, XBRL is
designed to be eXtensible, allowing preparers to create an extension
taxonomy (customised) that adds to the public taxonomy.
Tagging” is a symbolic term for assigning coded identifi ers to
information. The most fundamental steps in developing an XBRL report
are tagging data and applying a style sheet to the tagged data to
convert XBRL files into a document that looks similar to the paper
reports users of financial statements have been accustomed to. The
tagging process is governed by the XBRL Specifi cation (taxonomy), a
detailed descripttion of how to go about complying with the XBRL
language. Not all information in business reports needs to be tagged.
the user’s application would be able to interact directly with the
reported data. The tags (ticket, label, mark, card) are read by the
computer, by programmers, and by other parties who need or want to see
the tags. Users typically get what they need from readable printouts
and the interfaces created by their software applications.
Instance Documents:
XML file that contains business reporting information and represents a
collection of financial facts and report-specific information using
tags from one or more XBRL taxonomies.
An XBRL instance document is a business report in an e-format created
according to the relevant taxonomy i.e. rules of XBRL. It contains
facts that are defined by the elements in the taxonomy it refers to,
together with their values and an explanation of the context in which
they are placed.
XBRL Instance document creation
Tag:The elements as defined in taxonomy are also referred as XBRL tags
or only tags. Mark-up languages such as XBRL and XML use tags to
describe data < opening tag & > is closing tag. In between,
elelements/data are given.
FACTS:The values included in the instance document, which correspond
to the concepts included in the taxonomy, are called as facts. These
facts can either be numeric (monetary, shares or other numeric
information) or non-numeric (string, date or text block). E.g.
Concept Fact
Intangible Assets 100000
Name of subsidiary Sample company ltd.
Date of board meeting 2011-04-30
Earnings per share 2.33
Elements
XBRL components (items, domain members, dimensions, and so forth). The
representation of a financial reporting concept, including: line items
in the face of the financial statements, important narrative
disclosures, and rows and columns in tables.
An element is a business or a financial concept which is defined in
the taxonomy according to XBRL specifications. Each element has a
type, is identified by name and may have a set of attribute
specifications as per the XBRL standards. E.g. SourcesOfFunds,
InterestCharges etc.
Face of the financial statements: Financial statements without the
notes or schedules.
XBRL Implementation Options for Phase 1 Companies
CONCLUSION:
The degree of proficiency required with regard to the technology would
depend on the area of specialization that a CA intends to focus viz.
developing Taxonomies and Extension would require a significant
degree of expertise in related tools. ICAI members need to evaluate
the various opportunities that will present themselves in XBRL
reporting and develop their own professional roadmaps.

THANKS

--
Anesh Patil.

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