WHAT IS XBRL?
XBRL stands for eXtensible Business Reporting Language. XBRL is a language for the electronic communication of business and financial data which is revolutionising business reporting around the world.
XBRL has been developed by XBRL International, a not-for-profit consortium of over 450 companies and organizations which is promoting its worldwide use. India is now an established jurisdiction of XBRL International. A separate company, under section 25 has been created, to manage the operations of XBRL India.
APPLICABILITY OF XBRL IN INDIA
The Ministry of Corporate Affairs, Government of India, vide its General Circular No. 37/2011, dated June 07, 2011 has required the following class of companies (except banking companies, insurance companies, power companies and the Non Banking Financial Companies) to file the financial statements in XBRL form only from the year 2010– 2011:
- All companies listed in India and their Indian subsidiaries;
- All companies having a paid up capital of Rs 5 crores and above; and
- All companies having a turnover of Rs 100 crores and above
BENEFITS & USES
XBRL offers major benefits at all stages of business reporting and analysis:
· Automation and cost saving
· Faster, more reliable and more accurate handling of data,
· Improved analysis,better quality of information and decision-making.
· It is extensible, so companies and other organisations can adapt it to meet a variety of special requirements.
· The language is a flexible one which is intended to support all current aspects of reporting in different countries and industries.
THE WORKING OF XBRL
XBRL makes the data readable with the help of 2 documents:
– Instance Document
XBRL Taxonomies are the dictionaries which the language uses. These are the categorisation schemes which define the specific tags for individual items of data (such as “net profit”). National jurisdictions have different accounting regulations, so each may have its own taxonomy of financial reporting.
For Example: The taxonomy contains the Element Name: Loans Advances which has the following characteristics:
Data Type: Monetary
Substitution Group: Item
Balance Type: Debit
Period Type: Instant
The Label, Loans Advances, is defined as the total amount of loans and advances given by the entity to all parties and is represented by the sum of the following:
Secured Loans Advances,Unsecured Loans Advances,Advance Tax Paid,Deposit Assets,Tax Deducted At Source,Other Advance Taxes,Advance Tax paid
A 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.
It is a business report in an electronic format created according to the rules of the XBRL. It contains the 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.
Instances documents must be linked to at least one taxonomy, which defines the contexts, labels or references.
we can infer the following information about the data given for Loans & Advances:
· Loans Advances amount= Rs. 92868202
· Currency: INR
· Balance: Debit
· Company: ABC Co. Ltd.
HOW TO CREATE FINANCIAL STATEMEMTS IN XBRL
Generation of XBRL formatted financial statements can be through the following modes:
a) Conversion: At the most basic level of adoption, an organization takes information from various sources within the organization and then copies or keys this information into an XBRL tool. There is no process change in thisapproach, merely a conversion of the results of the existing processes to a different format—including the existing inefficiencies.
b) Outsourced: A second alternative is to use a third-party service provider to generate the XBRL financial statements by interfacing with them with the financial reporting tool.
STEPS IN CREATION OF XBRL INSTANCE DOCUMENT
- Obtain audited financial statements.
- These audited financial statements would preferably be in Excel and/ or Word format.
Preparation of the source document based on the audited financial statement for XBRL conversion.
- Mapping the source document to the Target Taxonomy as mandated by MCA.
Validating the mapped document to create instance document.
- Eliminating errors arising out of validation based on error logs.
- Approval of Instances and mapping by the Board of Directors before creating XBRL instance document.
- Creating XBRL instance document.
- Validation of the XBRL instance document by the management using the tool provided by the MCA before filing with the Office of the Registrar of Companies (ROC).
In the above procedure, Mapping or Tagging as per Step no. 4 is the most important step for the creation of an Instance Document because it requires exercise of reasonable judgement and accounting knowledge in mapping the financial statement items to the appropriate tags in the taxonomy.Judgement has to exercised having regard to the nature of the financial statement item/account head to ensure selection of the most appropriate tag.
It has to be ensured that the XBRL financial statements so generated are as per the taxonomy defined by MCA.This includes ensuring completeness, accuracy, mapping and structure of the
XBRL financial statements.
- Completeness means that all required information is formatted at the required levels as defined by the entity’s reporting environment. Only permitted information selected by the entity is included in the eXtensible Business Reporting Language (XBRL) files.
- Mapping means that the elements selected are consistent with the meaning of the associated concepts in the sourceinformation in accordance with the requirements of theentity’s reporting environment.
- Accuracy means that the amounts, dates, other attributes (for example, Monetary units), and relationships (order and calculations) in the instance document and related files are consistent with the source information in accordance with the requirements of the entity’s reporting environment.
- Structure means that XBRL files are structured in accordance with the requirements of the entity’s reporting environment.
To avoid any misunderstandings at a later stage, it would be appropriate that terms of the engagement are formalised in an engagement letter. An illustrative engagement letter is given as per Annexure A. An illustrative management representation letter is given as per Appendix B.
STEPS TO BE FOLLOWED FOR E-FILING OF XBRL DOCUMENTS
- Download MCA XBRL validation tool from MCA portal: Validating the instance document is a pre requisite before filing the balance sheet and profit & loss account on MCA portal.
- Load the Instance Document in the validation tool: To load the instance document, you need to click the open button, select the instance document and open it. The detail of the company is available under the General Information tag in the XBRL viewer.
- Use the tool to validate the instance document.
- Perform pre-scrutiny of the validated instance document through the 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.
- Final verification post pre-scrutiny of the document: the next step is to generate pdf by using ‘Export to pdf’ functionality in the tool to verify the final instance document.
- Attach instance document to the Form 23AC-XBRL and Form 23ACA-XBRL: First Form 23AC-XBRL and 23ACA-XBRL are to be filled up. Thereafter, the validated and pre-scrutinized instance document for Balance sheet is to be attached to Form 23AC-XBRL.Similarly, the instance document for Profit and Loss account is to be attached to Form 23ACA-XBRL. Separate instance documents need to be attached w.r.t. Standalone financial statements and consolidated financial statements.
- Submitting the Form 23AC-XBRL and Form 23ACA-XBRL 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 e-Form filing process.
- Viewing of balance sheet and profit and loss submitted in XBRL form on MCA portal: The XBRL instance documents submitted along with Form 23AC-XBRL and 23ACA-XBRL 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.