All about XBRL Filing

 CS S. Dhanapal

SECTION A – XBRL FILING OF FINANCIAL STATEMENTS

XBRL is the acronym for Extensible Business Reporting Language. As the name itself suggests, it is a language for presentation of data which permits easy analysis and interpretation thereby reducing cost, time and effort. It promotes paperless reporting and thus is in line with the green initiatives being promoted world over.

XBRL is only a method of presentation or reporting. It does not attempt to make any changes in the content to be reported. The idea behind XBRL is simple. Instead of treating financial information as a block of text – as in a standard internet page or a printed document – it provides an identifying label (tag) for each individual line item of data. This data then becomes computer readable.

Ministry of Corporate Affairs introduced the concept of XBRL filing of financial statements to ROC by mandating certain class of companies to file balance sheets and profit and loss account for the year 2010-11 onwards by using XBRL taxonomy. On 05^th October 2011, Companies (Filing of documents and forms in Extensible Business Reporting Language) Rules, 2011 were notified.

UNDERSTANDING XBRL THROUGH THE CONCEPT OF 5 W’S

Þ     Applicability

Þ     Due Date for filing (for FY 11-12)

Non-XBRL Filing

The Ministry issued General Circular No.30/2012 Dated 28.09.2012, In order to ensure smooth filing and to avoid last minute rush, the due date of filing of e-forms 23AC(Non-XBRL) and 23ACA (Non XBRL) as per new schedule VI is extended in following manner without any additional fee :-

Company holding AGM or whose due date for holding AGM is on or before 20.09.2012, the time limit will be 03.11.2012 or due date of filing, whichever is later.

Company holding AGM or whose due date for holding AGM is on or after 21.09.2012, the time limit will be 22.11.2012 or due date of filing, whichever is later.

XBRL Filing

As per General Circular No. 16/2012 issued by the Ministry of Corporate Affairs on 6th July 2012, all companies referred to in para 2 of the said circular will be allowed to file their financial statements in XBRL mode without any additional fee/ penalty up to15th November, 2012 or within 30 days from the date of their AGM, whichever is later.

XBRL filing for the financial year 2011-12 is not enabled by MCA as yet since the validation tool is still under finalization. Recently, MCA has come out with the beta version of the validation tool which is likely to be made effective from 14th October 2012.

MCA XBRL Validation Tool ensures that only those XBRL documents; that satisfy the requirements of Taxonomy and Business Rules, are filed with MCA under section 220 of the Companies Act, 1956. MCA Validation Tool is an important mean for improving the quality of financial information/disclosures in XBRL. Successful validation of the instance document is a pre-requisite before filing the balance sheet and profit & loss account on MCA portal.
It may, however, be noted that mere successful validation of an XBRL document by the MCA Validation Tool does not mean that the provisions under section 211 of the Companies Act, 1956 have fully been complied with. It is important to ensure that this ‘validated’ XBRL document also provides a true and fair view of the state of affairs of the company as per financial statements adopted in the AGM. MCA XBRL Validation Tool also provides the ‘human-readable’ pdf version of the XBRL document for ease in authentication and certification of the XBRL document being filed by the company to MCA.

SECTION B – XBRL FILING OF COST AUDIT AND COMPLIANCE REPORT

Ministry of Corporate Affairs have come out with a number of circulars and notifications in the recent times relating to maintenance of Cost Accounting Records and Cost Audit. These circulars and notifications have not only brought remarkable changes in the applicability of cost accounting and audit rules but have introduced a number of new requirements like obtaining of Cost Compliance Report, filing of reports in XBRL mode, fees for appointment of cost auditor etc.

These announcements and changes have created a lot of perplexity in the minds of the readers regarding the applicability of the revised rules. Moreover, since the onus of compliance has been shifted from the legislator to the company, it becomes even more vital to understand the changes and their implications.

For ease of understanding, we have divided this section into 2 parts –

1. Maintenance of Cost Accounting Records and Filing of Cost Compliance Report

2. Appointment of Cost Auditor and filing of Cost Audit Report

Maintenance of Cost Accounting Records and Filing of Cost Compliance Report

Þ     Notification

The Companies (Cost Accounting Records) Rules, 2011 were notified on 03rd June 2011 vide notification no. G.S.R. 429(E), issued by the Ministry of Corporate Affairs in exercise of the powers conferred by section 642(1)(b) read with section 209(1)(d) of the Companies Act, 1956. These rules are in supersession of all Cost Accounting Record Rules issued so far.

Þ     Applicability

These rules shall apply to every company, including a foreign company as defined under section 591 of the Act which is engaged in the production, processing, manufacturing, or mining activities and which satisfies any one of the following criteria

These rules shall not apply to the following class of companies –

• A company which is a body corporate governed by any special Act

• Activities or products covered in any of the following Industry Specific rules:

(a) Cost Accounting Records (Bulk Drugs) Rules, 1974

(b) Cost Accounting Records (Formulations) Rules, 1988

(c) Cost Accounting Records (Fertilizers) Rules, 1993

(d) Cost Accounting Records (Sugar) Rules, 1997

(e) Cost Accounting Records (Industrial Alcohol) Rules, 1997

(f) Cost Accounting Records (Electricity Industry) Rules, 2001

(g) Cost Accounting Records (Petroleum Industry) Rules, 2002

(h) Cost Accounting Records (Telecommunications) Rules, 2002

In supersession of the aforesaid Rules, following industry specific Cost Accounting Records Rules were notified:

1. Cost Accounting Records (Telecommunication Industry) Rules 2011 notified vide GSR 869(E) dated December 7, 2011

2. Cost Accounting Records (Petroleum Industry) Rules 2011 notified vide GSR 870(E) dated December 7, 2011.

3. Cost Accounting Records (Electricity Industry) Rules 2011 notified vide GSR 871(E) dated December 7, 2011.

4. Cost Accounting Records (Sugar Industry) Rules 2011 notified vide GSR 872(E) dated December 7, 2011.

5. Cost Accounting Records (Fertilizer Industry) Rules 2011 notified vide GSR 873(E) dated December 7, 2011.

6. Cost Accounting Records (Pharmaceutical Industry) Rules 2011 notified vide GSR 874(E) dated December 7, 2011.

• Whole sale of retail trading activities.

• Banking, financial, leasing, investment, Insurance, education, healthcare, tourism, travel, hospitality, recreation, transport services, business/professional consultancy, IT & IT enabled services, research & development, postal/courier services, etc. unless any of these have been specifically covered under any other Cost Accounting Records Rules.

• Companies engaged in rendering job work operations or contracting/sub-contracting activities, and are paid only the job work or conversion charges, such as tailoring, baking, repairing, painting, printing, constructing, servicing, etc.

• Companies engaged in the production, processing, manufacturing or mining activities till such time they commence their commercial operations.

• Ancillary products/activities of companies incidental to their main operations (i.e. products/activities that do not constitute their main line of business) and wherein the total turnover from the sale of each such ancillary products/activities do not exceed 2% of the total turnover of the company or Rs.20 crores, whichever is lower.

Þ     Maintenance of Records

Þ     Filing of Compliance Report

Þ     Due date for filing under XBRL mode

As per General Circular No. 8/2012 dated 10.05.2012, MCA had notified that XBRL filing for Cost Compliance Report will be enabled after 30.06.2012 which was modified to 31.07.2012 vide Circular dated 29.06.2012.

Thereafter vide General Circular No. 18/2012 dated 26.07.2012, MCA has further extended the due date to 31.12.2012.

As per the XBRL website maintained by MCA, the Validation Tool for XBRL filing of Compliance Report to MCA is presently under development. Filing can be enabled only after the validation tool is ready.

Þ     Format of Compliance Report and Form for filing

APPOINTMENT OF COST AUDITOR AND FILING OF COST AUDIT REPORT

Þ     Procedure for Appointment of Cost Auditor

Þ     The Companies (Cost Audit Report) Rules, 2011

v  Notification

The Companies (Cost Audit Report) Rules, 2011 were notified on 03rd June 2011 vide notification no. G.S.R. 430(E), issued by the Ministry of Corporate Affairs in exercise of the powers conferred by section 642(1)(b) read with section 233B(4) and Section 227(1) of the Companies Act, 1956. These rules are in supersession of the Cost Audit Report Rules, 2001.

v  Applicability

• These rules shall apply to every company in respect of which an audit of the cost records has been ordered by the Central Government under sub-section (1) of section 233B of the Act.
  

• Vide order reference number F.NO. 52/26/CAB-2010 dated 30.06.2011 (for FY 10-11) and F.NO. 52/26/CAB-2010 dated 24.01.2012 (for FY 11-12) Central Government has ordered Cost Audit for following class of companies –

• All Companies to which The Companies (Cost Accounting Records) Rules, 2011 apply, AND

• Which are engaged in production, processing, manufacturing or mining of products/activities given in table below, AND

• Wherein the aggregate value of the turnover made by the company from sale or supply of all products or activities during the immediately preceding financial year exceeds rupees 100 crores, OR
  

• Wherein the company’s equity or debt securities are listed or are in the process of listing on any stock exchange, whether in India or outside India.

• Products/Activities include intermediate or allied products and articles. Clarification regarding meaning of intermediate/allied products and their examples is given in General Circular No. 67/2011 dated 30.11.2011.

Products/Activities to which cost audit is applicable for FY 10-11

(F.NO. 52/26/CAB-2010 dated 30.06.2011)

 Products/Activities to which cost audit is applicable for FY 11-12

F.NO. 52/26/CAB-2010 dated 24.01.2012

These rules shall not apply to the following class of companies –

• Generation of electricity for captive consumption
• Own manufactured products that are consumed exclusively by the company for the sole purpose of production, processing, manufacturing, or mining of its other product or activities that are subject to cost audit.
• All units located in SEZs, EPZs, FTZs & 100% EOUs (refer general Circular No. 11/2012 dated 25.05.2012 for more details)

v  Cost Audit Report

 v  Filing of Cost Audit Report in XBRL

Ministry of Corporate Affairs has mandated filing of the Cost Audit Report and Compliance Report from the financial year 2011-12 onwards (including overdue reports relating to any previous year) by using the XBRL taxonomy vide General Circular No. 8/2012 dated 10.5.2012 [as amended on 29.6.2012] and No. 18/2012 dated 26.7.2012. All such companies that are NOT covered under the company specific Cost Audit Orders issued prior to 31.3.2011 and/or under the industry specific Cost Audit Order No. 52/26/CAB-2010 dated 2nd May 2011, 30th June 2011 and 24th January 2012 are not required to file Cost Audit Report. However, companies meeting with the threshold limits as prescribed in the relevant Cost Accounting Records Rules 2011 are required to file Compliance Report in the XBRL format.

Due date for filing Cost Audit and Compliance Report, without additional fees has been notified as 31.12.2012 as per General Circular No. 18/2012 dated 26.07.2012.

The Validation Tool for XBRL filings of Cost Audit & Compliance Report to MCA is presently under development.

Table of Relevant MCA Circulars and Notifications

  FAQs ON COST AUDIT AND COMPLIANCE REPORT FILING

(Source: http://www.mca.gov.in/XBRL/Ques_Stake1.html)

1. Which are the companies that need to file the Cost Audit Report and Compliance Report in XBRL format?

Ministry of Corporate Affairs has mandated filing of the Cost Audit Report and Compliance Report from the financial year 2011-12 onwards (including overdue reports relating to any previous year) by using the XBRL taxonomy. The relevant General Circular No. 8/2012 dated 10.5.2012 [as amended on 29.6.2012] and No. 18/2012 dated 26.7.2012 issued by MCA can be accessed from the following link: http://www.mca.gov.in/Ministry/companies_act.html.

2. Which companies are not required to file the Cost Audit Report?

All such companies that are NOT covered under the company specific Cost Audit Orders issued prior to 31.3.2011 and/or under the industry specific Cost Audit Order No. 52/26/CAB-2010 dated 2nd May 2011, 30th June 2011 and 24th January 2012 are not required to file Cost Audit Report. However, companies meeting with the threshold limits as prescribed in the relevant Cost Accounting Records Rules 2011 are required to file Compliance Report in the XBRL format.

3. Which companies are exempted from filing the Compliance Report?

All such companies that are not covered under any of the Cost Accounting Records Rules notified in 2011 are not required to file the Compliance Report.

Further, as per MCA’s General Circular No. 68/2011 dated 30.11.2011 read with the General Circular No. 12/2012 dated 4.6.2012, such companies that are covered under any of the Cost Accounting Records Rules notified in 2011 but wherein all their products/activities, excluding the exempted categories, are covered under cost audit, are not required to separately file the Compliance Report.

4. If my Cost Audit Report pertains to the financial year prior to 2011-12, then do I need to file the report in XBRL format?

As per MCA’s General Circular No. 8/2012 dated 10.5.2012, all Cost Audit Reports required to be filed with the Central Government starting from financial year 2011-12 and also in respect of any financial years prior to 2011-12 [that has not been filed so far] need to be filed in XBRL format.

5. Central Government vide General Circular no. 18/2012 dated July 26, 2012 has extended filing of the Cost Audit Report in XBRL format till December 31, 2012. A company follows different financial year viz. from October 01, 2011 to September 30, 2012. As per Companies (Cost Audit Report) Rules, 2011, filing of Cost Audit Report becomes due by March 27, 2013, i.e. within 180 days from the end of the reporting year. Is this company still required to file the Cost Audit Report in XBRL format by December 31, 2012 or it would be allowed to file the report until March 27, 2013?

The companies are required to file their Cost Audit Report [or the Compliance report] for the year 2011-12 within 180 days of the close of the financial year or by December 31, 2012, whichever is later.

6. Who will certify XBRL filing for Cost Audit Report?

The Cost Auditor [or the lead Cost Auditor in case the company has more than one Cost Auditors] is required to digitally sign and file the Cost Audit Report for the company as a whole.

7. Who will certify XBRL filing for Compliance Report?

Any valid Member of the Institute of Cost Accountants of India who is either in full-time employment with the concerned company or is holding full-time Certificate of Practice can only certify the Compliance Report.

8. I am holding valid membership of the Institute of Cost Accountants of India as well as of the Institute of Company Secretaries of India. As a full-time employee of the company, can I certify its Compliance Report?

Yes, being a valid Member of the Institute of Cost Accountants of India and in full-time employment with the concerned company, you can certify its Compliance Report provided you are not signing the Compliance Report as Company Secretary or as Director of the company also.

9. The responsibility of filing Cost Audit Report with the Central Government lies with the Cost Auditor. Whose responsibility is it to create XBRL document?

Creation of the Cost Audit Report in XBRL format, as approved by the Board and certified by the Cost Auditor, is the responsibility of the company. However, filing the Cost Audit Report in XBRL format with the Central Government is the responsibility of the Cost Auditor, who has to ensure the correctness of data and other information contained in the XBRL Instance Document.

10. I have completed the Cost Audit and the Board of Directors has also approved the Cost Audit Report / Compliance Report. Is the Board of Directors of the company required to approve the Instance document of the Cost Audit Report / Compliance Report?

No separate approval from the Board is required for the Instance document of the Cost Audit Report or of the Compliance Report since the data/information contained in the Instance document would already have been approved by the Board of Directors. However, if the data & other information as given in the Instance document differ from that approved by the Board, then it is advisable to get fresh approval of the revised Cost Audit Report or the Compliance Report unless the Board while according approval had authorized any officer of the company to make modifications as required in the XBRL document.

11. A company has not appointed anyone as the lead cost auditor. Is it required to appoint a lead cost auditor for consolidation?

The company is not required to separately appoint a lead Cost Auditor. It may designate/nominate any one of the existing Cost Auditors as the lead Cost Auditor and assign the additional task of consolidation, who would be responsible for verifying the consolidated report and filing the same with the Central Government.

12. Is Performance Appraisal Report required to be filed with the Central Government as a part of the Cost Audit Report?

As per provisions of the Companies (Cost Audit Report) Rules, 2011, every cost auditor, who submits a cost audit report, is also required to furnish Performance Appraisal Report to the Board/Audit Committee of the company in the prescribed format (Form III). However, this report will not be required to be filed with the Central Government.

13. My company is in the business of power generation. As per the MCA Circular, power companies are not required to file the Balance Sheet and Profit & Loss Account in XBRL format. Do I still need to file Cost Audit Report / Compliance Report (as applicable) in XBRL format?

Power generation companies have been exempted from filing their Balance Sheet and Profit & Loss Account in XBRL format as the relevant taxonomy as per disclosure requirements under the Electricity Act, 2003 is still under development. However, under the said Act, there are no such separate disclosure requirements for cost details. Hence, the costing Taxonomy for filing the Cost Audit Report or the Compliance Report is common to all companies. Therefore, companies engaged in the business of power generation, transmission or distribution are also required to file Cost Audit Report / Compliance Report (as applicable) in the XBRL format.

(Written by S.Dhanapal, Senior Partner, S Dhanapal & Associates, A firm of Practising Company Secretaries, Chennai.)

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