All listed companies to file their financial statements
The mandatory filing of company financials in the XBRL format will make it easier to slice and dice data by Manu Kaushik.
What is proposed: Starting financial year 2010/2011, all companies listed in India and their subsidiaries with paid-up capital of Rs 5 crore and above, or with turnover of over Rs 100 crore, are required to file their financial statements including balance sheets, profit and loss account, and cash flow statements, among others, in the XBRL, or eXtensible Business Reporting Language, format. The Ministry of Corporate Affairs, or MCA, which plans to cover about 20,000 companies in the first phase, has set a deadline of September 30 for the companies to comply with the new rule.
What will change: So far, companies have been filing their annual returns and balance sheets to the MCA by filling up an e-form. Financial statements are presented in Word, Excel or HTML formats that can be read but not analysed or processed according to the user's needs. Now, companies will generate a valid XBRL document that provides an identifying tag for individual data using the taxonomy prescribed by the regulators. The document will be machine readable and can be automatically read and analysed by users.
Advantages: XBRL will allow investors, analysts, financial institutions, companies and regulators to make efficient use of financial data. Says Ram Iyer, Director of Accounting Advisory Services at KPMG: "XBRL will cut time-consuming and costly processes of manual re-entry and comparison, and afford higher accuracy and an overall improvement in the quality of information for decision-making purposes."
Global Experience: The United States, the Netherlands, China and Britain have already adopted the XBRL format for filing financial statements. In 2004, China became the first country to formally adopt XBRL for financial reporting. The US, which adopted XBRL in 2008, has been implementing it in a phased manner and is expected to make it mandatory for all companies by the middle of next year.
What will change: So far, companies have been filing their annual returns and balance sheets to the MCA by filling up an e-form. Financial statements are presented in Word, Excel or HTML formats that can be read but not analysed or processed according to the user's needs. Now, companies will generate a valid XBRL document that provides an identifying tag for individual data using the taxonomy prescribed by the regulators. The document will be machine readable and can be automatically read and analysed by users.
Advantages: XBRL will allow investors, analysts, financial institutions, companies and regulators to make efficient use of financial data. Says Ram Iyer, Director of Accounting Advisory Services at KPMG: "XBRL will cut time-consuming and costly processes of manual re-entry and comparison, and afford higher accuracy and an overall improvement in the quality of information for decision-making purposes."
Global Experience: The United States, the Netherlands, China and Britain have already adopted the XBRL format for filing financial statements. In 2004, China became the first country to formally adopt XBRL for financial reporting. The US, which adopted XBRL in 2008, has been implementing it in a phased manner and is expected to make it mandatory for all companies by the middle of next year.
