XBRL stands for Extensible Business Reporting Language. It is a language for the electronic communication of business and financial data which is revolutionizing business reporting around the world. It provides major benefits in the preparation, analysis and communication of business information. It offers cost savings, greater efficiency and improved accuracy and reliability to all those involved in supplying or using financial data.
As per the Companies (Filing of Documents and Forms in Extensible Business Reporting Language) Rules, 2015, the following class of companies shall file their financial statements and other documents under section 137 of the Act with the Registrar in e-form AOC-4 XBRL within 30 days of the date of annual general meeting:
Non-banking financial companies, Housing finance companies and Companies engaged in the business of Banking and Insurance sector are exempt from filing of financial statements under these rules.
XBRL makes the data readable, with the help of two documents – Taxonomy and instance document.
Taxonomy defines the elements and their relationships based on the regulatory requirements. Using the taxonomy prescribed by the regulators, Companies need to map their reports, and generate a valid XBRL instance document. The process of mapping means matching the concepts as reported by the Company to the corresponding element in the taxonomy. In addition to assigning XBRL tag from taxonomy, information like unit of measurement, period of data, scale of reporting etc., needs to be included in the instance document.
An XBRL document is comprised of the taxonomy and the instance document. Taxonomy contains description and classification of business & financial terms. It can be referred as an electronic dictionary of the reporting concepts. Taxonomy consists of all the data definitions, the basic XBRL properties and the interrelationships amongst the concepts. It includes terms such as net income, EPS, cash, etc. Each term has specific attributes that help define it, including label and definition and potentially references. Taxonomies may represent hundreds or even thousands of individual business reporting concepts, mathematical and definitional relationships among them, along with text labels in multiple languages, references to authoritative literature, and information about how to display each concept to a user.
The XBRL instance document is made up of the actual facts and figures. It is a business report in an electronic format created according to the 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 Instances contain the reported data with their values and “contexts”. Instance document must be linked to at least one taxonomy, which defines the contexts, labels or references.
Thus, XBRL technology leads to more information exchanges that can be effectively automated by use. This one standard approach leads to the best interest of the company and also helps to represent business interest of the Company globally. It warrants the accuracy of all the financial data for the end users and early collaborative decisions by the companies or those whose interest is involved for acquisition/ rights etc.
(The author of this article is a Practicing Company Secretary located at New Delhi and can be reached at [email protected])
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