The Need of XBRL in the Present Era has become curiostic. It is very easy to get the most exotic information by just typing some key words at an internet search engine. Investors, Stakeholders and Analysts also regularly require fast access to financial and business information. They can’t wait for Annual Report with information that will become outdated by the time it gets published. This need of the Stakeholders can be fulfilled by XBRL, which is a data rich dialect of XML (Extensible Mark-up Language), the universally preferred language for transmitting information between the users over internet.
Presently, Companies present their financial statements on the internet in two universally acceptable static formats, namely, Hyper Text Markup Language (HTML) and Portable Document Format (PDF). These are static formats which enable a person to have access to physical location for getting desired financial information though easily, but with a drawback that the information can’t be exchanged, except by “copy and “paste”. It means that both HTML and PDF formats do not enable “Electronic Data Interchange” (EDI) of financial information. The result is that data loses its feature of being read by the computer systems. One has to access a single file and read it thoroughly page by page.
The Execution of XBRL in the best way that Instead of treating financial information as a block of text – as in a standard internet page or a printed document, XBRL provides a computer readable tag similar to a bar code so that electronically each individual item of data is uniquely identifiable. XBRL is the abbreviation for Extensible Business Reporting Language. XBRL is a computer language made for electronic transmission of business and financial data, which can be used in preparation, analysis and communication of business information in a more efficient and effective manner. It is an open technology standard, free from any license fees, software agonistic and accounting framework neutral. It can be said to be a way of presentation, as it does not intend to modify any of the Generally Accepted Accounting Principal (GAAP) but to present them in a suitable format which facilitates further analysis and comparison of data.XBRL is an open software specification developed through a process of collaboration between accountants and technologist from all over the world.
The Institute of Chartered Accountant of India constituted the XBRL Group in 2007 for undertaking the development and promotion of XBRL in India. The Institute is spearheading the XBRL initiative in the country and is the provisional jurisdiction of XBRL in India. The ICAI, India jurisdiction has developed the taxonomy for general purpose financial statements for commercial and industrial sector. The exposure draft of the taxonomy has already been issued and it will be sent for accreditation by XBRL, International shortly. Taxonomy for banks is under preparation and the Exposure Draft is expected to be issued shortly. In July 2009, ICAI had written to the MCA to consider mandatory filing of financial statements in XBRL.
Advantages of XBRL
XBRL enables producers and consumers of financial data to switch recourses away from costly manual process, typically involving time-consuming comparison, assembling and re-entry of data. They are able to concentrate effort on analysis, aided by software which can validate and process XBRL information.
· Automated Processing of Information
XBRL enables automated processing of business information by cutting out laborious process of manual re-entry and comparison.
· Fast accessibility
XBRL is an internet based information standard, it enables seamless flow of data. Thus the user of financial statement may receive, find, compare and analyse the data easily.
· Handling of Data
XBRL can handle data in different languages and AS, because XBRL is extensible and flexible, can be adapted to wide variety of different requirements.
· Freely Available
XBRL is not a Proprietary Technology. It is an open technology standard, free from license fees and available to the public.
· Flexibility in Business Reporting
XBRL allows flexibility to communicate a specific concept. Though it requires Standardization of common business reporting concepts but it allows flexibility to extend the vocabulary to meet individual circumstances.
· Financial Statement
XBRL can be used to transmit and exchange financial information in an effective manner. The Ministry of Corporate Affairs has mandated to file from 23AC (Balance Sheet) and Form 23ACA (Profit and Loss) in XBRL format.
· Tax Report
Tax return can be prepared and filled efficiently under XBRL System.
· Accounting and Business Report
XBRL enables reuse of data, therefore Management and Reporting can be done very quickly.
· Regulatory Filling
Specification for large number of fillings required by Regulator is possible under XBRL format which helps in monitoring any irregularities in the affairs of Companies and market intermediaries.
· Authoritative Literature
XBRL is the standard way for describing accounting related authoritative literature published by the AICPA, FASBandASB etc.
XBRL has already been put to practical use and implemented in more than 40 Countries and XBRL are growing rapidly around the world. In numerous Countries, XBRL has either been made mandatory by the regulator or Govt. agencies for various types of external reporting or is currently in use for voluntary programs.
Thus XBRL, when implemented as planned by the Ministry of Corporate Affairs, will have a favorable impact on Govt. and quality of financial information being filed with it. In India, financial using XBRL is yet to come up into effect and there is a considerable scope for reducing overlaps in filling information with number of regulatory agencies viz. the Reserve Bank of India, Income Tax Department, SEBI etc.