The ministry of corporate affairs is planning to introduce extensible business reporting language (XBRL) for its MCA 21 portal, which is the database for 9 lakh companies in India. This means that the companies will also have to file their documents in the XBRL format, which would inturn increase their compliance cost. At present, XBRL is being followed in many countries including the US, where after a period of voluntary compliance with XBRL, they are now moving towards mandatory XBRL filings for the domestic companies.
The XBRL is an electronic format for communication of business and financial data that allows the users of financial information to electronically retrieve data with greater assurance of accuracy. According to experts, while XBRL would involve some initial conversion costs for companies, the long-term benefits for investors and the capital markets would be significant.
According to Jamil Khatri, head of accounting advisory services, KPMG, “XBRL filings would ensure that financial data is filed in a standard format and is retrievable electronically. This would also facilitate detailed analysis of the underlying data using standard data analysis tools. This would only involve initial conversion cost but keeping in mind the long term benefits, it is a good move.” An MCA official told FE, “The ministry would be working with the accounting regulator, Institute of Chartered Accountants of India for the application of the reporting language to the MCA 21 database.”
Seeing the rising importance of XBRL as an effective means of communicating financial information, ICAI constituted the XBRL group in 2007 for undertaking the development and promotion of XBRL in India. With the use of XBRL, the software can also immediately confirm the financial data, highlighting errors and gaps which can immediately be addressed. It also helps the user in selecting and processing the data for re-use. At present, MCA 21 is only able to provide the information of one company at a time and the data filed in the scanned PDF format cannot be collated. In case of XBRL language, the user would be able to obtain information of a number of companies that can be collated, analysed and retrieved at the same time. This will be of a great help to the stakeholders as it would become easier for them to gather information about many companies.
The usage of XBRL in MCA 21 would make filing of documents much easier for companies, and at the same time the stakeholders would be able to receive the financial data in a customized manner. They would also come to know the profitability of a particular industry segment.
XBRL would be beneficial for those who collect business data including governments, regulators, economic agencies, stock exchanges, financial information companies and the like and those who produce or use it, including accountants, auditors, company managers, financial analysts, investors and creditors.