What is XBRL?
XBRL is a language for e-communication of financial and business data for business reporting. It is a standardized communication language in electronic form to express, report or file a financial statements by a Companies. However, XBRL is only a method of presentation or reporting. It does not attempt to make any changes in the content to be reported.
The full form of XBRL is “EXTENSIBLE BUSINESS REPORTING LANGUAGE”.
Below mentioned class of companies shall file their financial statements and other documents under section 137 of the Companies Act, 2013 with the Registrar in E FORM AOC-4 XBRL:-
However, Non-banking financial companies, Housing finance companies and Companies engaged in the business of Banking and Insurance sector are exempted from filing of financial statements under these rules.
Moreover the companies which have filed their financial statements in XBRL under section 137 shall continue to file their financial statements and other documents in XBRL only, though they may cease to fall under the class of companies specified above.
XBRL makes the data readable, with the help of two documents
1. Taxonomy and
2. 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.
In Simplest of words possible, taxonomy can be defined as dictionary of accounting elements. This taxonomy is an ideal set of elements available with the ministry against which the data of the filer has to be tagged. Revised Taxonomy as released by MCA contains precisely 3,174 elements.
Tagging mechanism will be a process in which the data on physical financial documents will be converted as per available taxonomy. For the purpose of this tagging, XBRL softwares are available in the market. Details can also be obtained from XBRL portal of MCA.
(Note: Taxonomy as released by MCA as of today is compliant with Indian Accounting Standards and Existing Schedule VI to Companies Act, 1956. As and when IND – AS and Revised Schedule VI comes applicable, the same will be revised and hosted on MCA Portal)
Once the tagging process is complete, the document that will be generated will be a machine readable XBRL document; this document is called as Instance Document.
The following Documents need to be filed in XBRL Format:
XBRL offers many benefits in the field of business reporting and analysis:
The use of XBRL is quite varied and wide. XBRL enables producers and consumers of financial data to switch resources away from costly manual processes, typically involving time-consuming comparison, assembly and re-entry of data.
Elements and their characteristics like the nature of field (text, numeric etc), the nature of their balances, period type etc. In totality there are 3,174 elements.
Extended Link Base – Extended link base are further groupings of elements and are in totality 57 in number.
Presentation Link Base – Detailing of Extended Link Base.
Step 1: Map or tag the company’s financial statements to the published taxonomy.
This can be done by following methods.
Certain ERP systems may have inbuilt feature to tag the financials to the published taxonomy of MCA XBRL Softwares.
Detailed list of software vendors for XBRL E-Filing can be obtained from http://www.mca.gov.in/XBRL
It must be noted that MCA does not recommend/associate itself with these vendors. It has been hosted just for public Convenience.
This is by far the most important and technical step of the process and nearly constitutes 70–80% of the XBRL E-Filing process. The Correctness of this mapping must be reviewed. Errors that creep in must be removed by professional judgement.
Step 2: Create an Instance Document based on the Mapping done above
Separate Instance document must be created for:
Standalone Balance sheet
Standalone Profit and Loss Account
Consolidated Balance sheet
Consolidated Profit and Loss Account
Step 3: Validate the created instance document
The Validation tool of MCA will be shortly available on the MCA portal. This tool is to be downloaded.