XBRL The Future Of Financial Reporting

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  • Building the case for XBRL.
  • What we say to dogs: “Okay, Ginger! I’ve had it! You stay out of garbage! Understand Ginger? Stay out of the garbage, or else!!”
  • To the Dog, Except for Ginger, that is its name, everything else is ‘blah’.What is blah.. – Used by my sister when she is angry on menoun 1. nonsense; rubbish: What they say is blah. 2. insipid; dull; uninteresting.
  • The information we give investors is detailed, precise and accurate. Most of it is useless and it arrives far too late to be of any help..!!
  • ANALYSTS & INVESTORS USE LESS THAN 30% OF THE INFORMATION CONTAINED IN THE ANNUAL REPORT
  • Can two applications interact between themselves.
  • APPLICATIONS OR COMPUTER SERVERS ARE NOT INTERACTING BY THEMSELVES OUTSIDE THEIR PERIPHERHY – GENERATING REPORTS IN WORD / EXCEL / PDF (CLOSED FORMATS) – NOT READABLE BY APPLICATIONS THEMSELVES I.E., THE OUTPUT OF ONE APPLICATION IS NOT AUTOMATICALLY INPUT – REQUIRE MANUAL RE-KEYING.
  • MANUAL EXTRACTION AND REKEYING OF DATA IS LABOURIOUS, ERROR PRONE AND ADDS NO VALUEDATA AGGREGATORS COMBINE FINANCIAL STATEMENT LINE ITEMS – “OTHERS”MORE TIME IS SPENT ON DATA MINING, DATA GATHERING AND LESS TIME IS SPENT ON DATA ANALYSIS
  • YOU NEED TO BE SHERLOCK HOLMES TO DIG ‘RELEVANT’ INFORMATION OUT OF THIS GARBAGE OF INFORMATION….YOU HAVE AN INFORMATION OVERLOAD AND YOU DON’T HAVE THE REQUISITE INFORMATION – AT THE TIME WHEN YOU REQUIRE IT THE MOST.
  • MORE TIME IS SPENT ON DATA MINING, DATA GATHERING AND LESS TIME IS SPENT ON DATA ANALYSIS
  • A Simple ExplanationThe idea behind XBRL, eXtensible Business Reporting Language, 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 tag for each individual item of data. This is computer readable. For example, company net profit has its own unique tag.
  • META DATA (DATA ABOUT DATA) SET OUT IN A TAXONOMY (OR DATA DICTIONARY) IT CAPTURES THE DEFINITION OF INDIVIDUAL REPORTING CONCEPTS AND THE RELATIONSHIPS BETWEEN THEM---------------It is not just data or text that floats along with an electronic tag. The Tag contains attributes or meta data & Thus, it is not just 'content' but also the 'context' that is being transmitted.
  • XBRL is Royalty free.. However, here lies the catch : Basically, the Data Standard (Taxonomy) is free - The Conversion Utility and the Viewer – applications required to generate and view the Financial Statements in XBRLare developed by Proprietary vendors and hence subject to both royalty and licenses.
  • An EXTENSION TAXONOMY allows a company to create and customize concepts and elements for their particular reporting practices. Extension taxonomies import then build on, or “extend” the core reporting taxonomy.
  • AN INTERESTING POINT TO NOTE IS XBRL IS – BEING CONCEPTUALISED AND DEVELOPED BY CA / CPA AND NOT COMPUTER PROGRAMMERS. THE FATHER OF XBRL IS A CA/ CPA. PERSONS WHO HAVE KEY POSTS IN XBRL ARE CA / CPA AND NOT COMPUTER PROGRAMMERS.WE CAN SAFELY SAY XBRL IS DEMOCRACY FOR CA FRATERNITY – FOR THE ACCOUNTANTS, BY THE ACCOUNTANTS AND OF THE ACCOUNTANTS.
  • XBRL is democracy for Accountants – Of the Accountants, by the Accountants and (for the Accountants)
  • U. P. C. – UNIVERSAL PRODUCT CODE – EAN & UAN – ARTICLE NUMBERING – YOU CANNOT EXPORT A PRODUCT WITHOUT A BARCODE.WHAT WILL XBRL DO TO FINANCIAL REPORTING ?? – WE WILL ANSWER THIS QUESTION LATER IN THIS SESSION.
  • HUMOURA famous inspirational speaker said:"The best years of my life were spent in the arms of a woman who was not my wife!"The audience was silent with shock.He continued: "She was my mother!"Applause and laughter!A man tried this at home.After a few pegs, he said loudly to his wife, in kitchen: "The best years of my life were spent in the arms of a woman who was not my wife!"Standing for a moment trying to recall the second half, he finally blurted out: "I can't remember who she was!"   By the time he regained his senses, he was on a hospital bed, recovering from burns of boiling water! MORAL: Don't copy if you can't paste!
  • Rather than treating financial and business information as a block of text, as in a standard internet page or a printed document, XBRL allocates a computer readable identifying tag for each individual item of data. This enables reporting software to collect relevant data and place it in the appropriate financial reports. Businesses and accountants gain significant benefits through easier preparation, analysis and communication of information. These benefits include cost savings, greater efficiency, and improved accuracy and reliability of information.
  • Wordstar Analogy
  • National jurisdictions have different accounting regulations and accordingly separate Taxonomies are developed for different reporting purposes such as Indian GAAP C & I, IFRS, Bank Regulatory reporting, etcXBRL Specification 2.1 & XBRL Dimension 1.0 – Specifications for the Taxonomy.
  • An Instance Document is the XBRL financial report. -- OUTPUTExamples of instance documents include a set of financial statement or an earnings release encoded in XBRL format
  • Eg. ASSETS = LIABILITY + EQUITYSpecify Enumeration : Type of Goods = [Traded] [Manufactured]CIN Format – Valid CIN / SRN Format – Valid SRNMandatory Element, Use Only in case of Consolidated Financial StatementsEtcUse of Business RulesTo explain the data we are collecting; orTo explain the data which needs to be collected; orValidate the data prior to it being submittedBusiness Rules further express the semantic meaning of the data.
  • APPLICATIONS ARE INTERACTING WITHOUT HUMAN INTERVENTION / MANUAL PROCESSESSThe introduction of XBRL tags enables automated processing of business information by computer software, cutting out laborious and costly processes of manual re-entry and comparison. Computers can ACCESS, EXTRACT AND PROCESS XBRL data "intelligently": they can recognise the information in a XBRL document, select it, analyse it, store it, exchange it with other computers and present it automatically in a variety of ways for users. XBRL greatly increases the speed of handling of financial data, reduces the chance of error and permits automatic checking of informationXBRL is a format for exchanging information between applications.  Therefore each application will store data in whatever form is most effective for its own requirements and import and export information in XBRL format so that it can be readily imported or exported in turn by other applications.  In some applications, for example, the XBRL formatted information being used may be mostly tabular numeric information, hence easily manipulated in a relational database.  In other applications, the XBRL information may consist of narrative document-like structures with a lot of text, so that a native XML database may be more appropriate.  There is no mandatory relationship between XBRL and any particular database or other processing or storage architecture.
  • BAR CODING IS ASSOCIATED WITH SAVINGS / QUALITY / EFFICIENCY IN PRODUCT DISTRIBUTION.WE CANNOT EXPORT WITHOUT A BARCODE; YOU CANNOT RUN A COMPANY WITHOUT XBRL.XBRL “TAGS” can be thought of as a “Bar Code” system for financial information, allowing financial statements to be read and understood by a computer.
  • XBRL IS THE SINGLE LINK…!!
  • XBRL is an Accounting Standard : No.  XBRL is simply a language for transmitting information.  It must accurately reflect data reported under different standards – it does not change them. XBRL will never tell you… • when to recognize revenue ; • if you qualify for hedge accounting ; • whether you are required to consolidate a subsidiary XBRL provides a mechanism for communicating revenue or off balance sheet risk once you have determined what it is.XBRL is a Limited Chart of Accounts : No. XBRL Taxonomy is basically a Dictionary of key components and concepts in Financial Reports. Where, a Company / Entity has unique aspects to report in its Financials, XBRL allows Extensions.
  • Tag Label – At Beginning & At End – Links The Tag To TaxonomyTag ID – Used to create footnotes in XBRLDecimals – Specify the level of Rounding OffContext – Defines whether it is Instant / Duration & PeriodUnit – Gives the units of measurement of ValueValue – of the fact
  • Extra Process – Additional Costs
  • ACCOUNT MASTER – ADD THE TAG LABEL THERE.Benefits of Integrated Process – Decreased Cost and Time ~ in preparing Financials / time and control enhancements.
  • President, ICAI is ex-officio Chairman of XBRL, India.A core purpose of Accounting Institutes around the world is to enhance the access, quality and breadth of financial information available to the investing public.  XBRL will help achieve this.  Institutes also believe that the development of XBRL will help position their members as valued knowledge providers for their clients.  Businesses, large and small, are undergoing fundamental change.  Accountants, as the managers of the underlying language of business, can help organisations fit into the new digital world, solve business issues and capitilise on opportunities.
  • The objectives of XBRL India are: To promote and encourage the adoption of XBRL in India as the standard for electronic business reporting in India To facilitate education and marketing of XBRL To develop and manage XBRL taxonomies To keep the developed XBRL taxonomies updated with regard to international developments To represent Indian interests within XBRL International To contribute to the international development of XBRL
  • Axe the X
  • Instant n. a particular moment or point in timeDuration n. A period of existence or persistence
  • MeaningIf there is grouping of multiple facts in a single fact then a footnote should be attached.For Example In Annual Report of the company there isLegal and Professional Fees 2113 Legal Expenses 87 However, there is only one element LegalandProfessionalCharges in the Taxonomy for these elements and as Extensions are not allowed we have to group elements then: LegalandProfessionalCharges 2200 and the following footnote should be given for LegalandProfessionalCharges Legal and Professional Fees 2113 + Legal Expenses 87 Total 2200
  • If HTML guidelines are not followed – HTML tags other than those permitted under the Filing Manual are present then – XBRL Validation Tool displays - Warning Message.
  • VALIDATIONS : Validating that the instance document is as per the latest and correct version of taxonomy prescribed by MCAAll mandatory elements have been enteredOther validations as per taxonomy / Business Rules prescribed by MCA.
  • XBRL is just replacing the paper documents into e-mode, so it is of foremost importance to ensure that XBRL is true and correct vis-a-vis signed hard copy financials.XBRL is a language for transmitting business information. It must accurately reflect data reported in the Annual Report – it does not change them. There is a slight misconception regarding the term "Validation" Validation as per MCA Validation Tool is a technical validation covering the following areas - whether tags are conforming to taxonomy, business rules, minimum tagging requirements, etc. – “properly formatted file”The second aspect is the correctness and completeness of the XBRL Instance vis-a vis the Annual Report - where lies the responsibility of the management & the professional (CA/CS/CWA) certifying the XBRL Instance. A proper XBRL filing would include Validation as per MCA Tool as well correct and complete representation of the facts in the Annual Report as certified by the Professional (CA/CS/CWA).
  • SCAM – Structure, Completeness, Accuracy and Mapping – Mnemonic Codes
  • The responsibility for ensuring that the financial statements generated in the XBRL format are in accordance with the prescribed taxonomy is that of the management of the Company
  • Relevant Converter – MCA Validation Tool – Convert to PDF
  • XBRL The Future Of Financial Reporting

    1. 1. “the future of financial reporting” Presented by: NIRMAL GHORAWAT ACA, B.Com (Hons)
    2. 2. SESSION 1 OVERVIEW XBRL - SETTING THE SCENE WHY? WHAT? WHO? HOW? WHERE? BENEFITS! HOW TO DO THE TAGGING? Presented By: CA. Nirmal Ghorawat 2
    3. 3. SETTING THE SCENE Presented By: CA. Nirmal Ghorawat 3
    4. 4. Presented By: CA. Nirmal Ghorawat 4
    5. 5. Presented By: CA. Nirmal Ghorawat 5
    6. 6. WHAT WE SAY TO INVESTORS? PUBLIC CORPORTATION LIMITED CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 2011 Sales 1,500,000 1,000,000 Cost of Sales 1,300,000 900,000 200,000 100,000 70,000 50,000 Net Profit before Tax 270,000 150,000 Provision for Taxation 90,000 45,000 180,000 105,000 1.80 1.05 Operating Profit Finance Expenses (Net of Income) Net Profit Earnings Per Share Presented By: CA. Nirmal Ghorawat 6
    7. 7. WHAT THEY HEAR? PUBLIC CORPORTATION LIMITED CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 2011 Sales 1,500,000 1,000,000 BLAH BLAH 1,300,000 900,000 BLAH BLAH 200,000 100,000 BLAH BLAH 70,000 50,000 BLAH BLAH 270,000 150,000 BLAH BLAH 90,000 45,000 180,000 105,000 1.80 1.05 Net Profit Earnings Per Share Presented By: CA. Nirmal Ghorawat 7
    8. 8. CAN WE TALK? Presented By: CA. Nirmal Ghorawat 8
    9. 9. WHY XBRL? FINANCIAL REPORTING model today is MANUAL & DISJOINTED AUDIT SOFTWARE PACKAGE COMPANY ERP DATA REPOSITORY REGULATOR AUDITORS MANUAL PROCESSES REPORTING COMPANY Presented By: CA. Nirmal Ghorawat MANUAL PROCESSES MANUAL PROCESSES USERS 9
    10. 10. WHY XBRL? FINANCIAL REPORTING INVOLVES MANUAL PROCESSES INSPITE OF AUTOMATION OF DATA PROCESSING WHY? BECAUSE COMPUTER APPLICATIONS SELDOM INTERACT THEMSELVES WHY? MANUAL EXTRACTION AND REKEYING OF DATA DIFFERENT APPLICATION HAVE DIFFERENT DATA STRUCTURES Presented By: CA. Nirmal Ghorawat 10
    11. 11. ACCESSING REPORTING DATA TODAY..!! Courtesy: Ms. Liv Watson, XII Presented By: CA. Nirmal Ghorawat 11
    12. 12. WHY XBRL? FINANCIAL REPORTING IS DISJOINTED WHY? BECAUSE REGULATORS/ USERS HAVE DIFFERING REQUIREMENTS SEBI / ROC INCOME TAX DEPARTMENT RBI / CERC / IRDA BANKS / FI’s / LENDERS IF INTERNATIONAL OPERATIONS? ET CETERA Presented By: CA. Nirmal Ghorawat 12
    13. 13. WHAT IS XBRL? An Abbreviation for: eXtensible Business Reporting Language Presented By: CA. Nirmal Ghorawat 13
    14. 14. WHAT IS XBRL? XBRL is Tagged Data Open Standard Based on XML Language for Electronic Communication of Business and Financial Information & On the Internet eXtensible Presented By: CA. Nirmal Ghorawat XBRL IS THE EMERGING GLOBAL STANDARD OF FINANCIAL REPORTING 14
    15. 15. XBRL IS TAGGED DATA XBRL tags INDIVIDUAL CONCEPTS for Electronic Dissemination CONCEPTS are defined based on a Common Framework (say, Indian GAAP, IFRS) – in a TAXONOMY Presented By: CA. Nirmal Ghorawat FINANCIAL INFORMATION TAXONOMY TAGGING INSTANCE DOCUMENT 15
    16. 16. WHAT IS TAGGING? PLAIN ‘UNSTRUCTURED’ TEXT TAGGED DATA Nirmal Ghorawat 434, Ajanta Shopping Centre, Ring Road, Surat – 395002 Gujarat +91-261-2327434 nirmal.ghorawat@icai.org Presented By: CA. Nirmal Ghorawat 16
    17. 17. WHAT’S IN A TAG? Label Description Data Type Balance Type Period Type Reference Presentation Calculation ATTRIBUTES OR META DATA (DATA ABOUT DATA) Presented By: CA. Nirmal Ghorawat 17
    18. 18. XBRL IS OPEN STANDARD XBRL is FREE OF ALL LICENSES SOFTWARE / APPLICATION INDEPENDENT Presented By: CA. Nirmal Ghorawat 18
    19. 19. XBRL IS ‘customized’ XML XBRL is Based on the XML However, XBRL is Powerful & Flexible version of XML Defined specifically to meet the requirements of Business & Financial information Presented By: CA. Nirmal Ghorawat 19
    20. 20. XBRL IS EXTENSIBLE FLEXIBLE.. Every entity’s business operations have UNIQUE aspects of reporting. TAXONOMY ANNUAL REPORT USE THE CONCEPT DEFINED IN THE TAXONOMY DEFINE THE CONCEPT DISCLOSE THE DEFINITION TOGETHER WITH THE FACT -----EXTENSION TAXONOMY Presented By: CA. Nirmal Ghorawat 20
    21. 21. WHO DEVELOPS XBRL? Mr. Charles Hoffman, AICPA, proposed the idea to use XML for electronic reporting of Financial Information to the AICPA High Tech Task Force Mr. Charles Hoffman, AICPA XBRL was born…!! Presented By: CA. Nirmal Ghorawat 21
    22. 22. WHO DEVELOPS XBRL? XBRL is being developed by XBRL International Inc. (XII) XII is Not for Profit Consortium of Regulators / Government Agencies, Accountancy Institutes, Leading Corporates & IT & Financial / Professional Services Companies. Presented By: CA. Nirmal Ghorawat 22
    23. 23. WHO DEVELOPS XBRL? XBRL International Inc. (XII) is a Consortium similar to how the U. P. C. Seal (commonly ‘Bar Code’) was developed… & BAR CODING HAS REVOLUTIONISED PRODUCT DISTRIBUTION… WHAT WILL XBRL DO TO FINANCIAL REPORTING? Presented By: CA. Nirmal Ghorawat 23
    24. 24. Presented By: CA. Nirmal Ghorawat 24
    25. 25. HOW XBRL WORKS? Unstructured Text Inventory Inventory consists of produce purchased for resale and supplies and are stated at the lower of cost or market using the first-in, first-out (FIFO) method. Inventory as of December 31, 2006 and 2005 amounted to $45,594 and 45, 34,456, $34,456 respectively. Courtesy: Mr. Charles Hoffman, AICPA Presented By: CA. Nirmal Ghorawat 25
    26. 26. HOW XBRL WORKS? Structured Text Unstructured Text Inventory <InventoryInformation> Inventory Inventory consists of produce purchased for resale and supplies and are stated at the lower of cost or market using the first-in, first-out (FIFO) method. Inventory as of December 31, 2006 and 2005 amounted to $45,594 and $34,456, respectively. </InventoryInformation> Inventory consists of produce purchased for resale and supplies and are stated at the lower of cost or market using the first-in, first-out (FIFO) method. Inventory as of December 31, 2006 and 2005 amounted to $45,594 45, and $34,456 respectively. 34,456, Courtesy: Mr. Charles Hoffman, AICPA Presented By: CA. Nirmal Ghorawat 26
    27. 27. HOW XBRL WORKS? Structured for PRESENTATION Unstructured Text <html> <p><bold>Inventory</bold></p> <p><bold> </bold></p> <p>Inventory <p> consists of produce purchased for resale and supplies and are stated at the lower of cost or market using the first-in, first-out (FIFO) method. Inventory as of December 31, 2006 and 2005 amounted to <bold>$45,594</bold> <bold> </bold> and <bold>$34,456</bold> <bold> </bold>, </bold> respectively.</p> </p> </html> Inventory Inventory consists of produce purchased for resale and supplies and are stated at the lower of cost or market using the first-in, first-out (FIFO) method. Inventory as of December 31, 2006 and 2005 amounted to 45, 34,456, $45,594 and $34,456 respectively. Courtesy: Mr. Charles Hoffman, AICPA Presented By: CA. Nirmal Ghorawat 27
    28. 28. HOW XBRL WORKS? Structured for MEANING Unstructured Text <Inventory> ConsistsOf> <ConsistsOf>produce purchased for resale and supplies</ConsistsOf> </ConsistsOf </ConsistsOf> StatedAt> of cost or <StatedAt>lower market</StatedAt> </StatedAt </StatedAt> ValuationMethod> </ValuationMet <ValuationMethod>FIFO</ValuationMet </ hod> hod> <Value2006 2006> </Value2006 <Value2006>$45,594</Value2006> </Value2006> Value2005 2005> </Value2005 <Value2005>$34,456</Value2005> </Value2005> </Inventory> Inventory Inventory consists of produce purchased for resale and supplies and are stated at the lower of cost or market using the first-in, first-out (FIFO) method. Inventory as of December 31, 2006 and 2005 amounted to $45,594 and 45, $34,456, respectively. 34,456 Courtesy: Mr. Charles Hoffman, AICPA Presented By: CA. Nirmal Ghorawat 28
    29. 29. HOW XBRL WORKS? Structured for MEANING, GLOBAL STANDARD contextRef=“D<InventoryComponents contextRef=“D2006”> ”>produce purchased for resale and 2006”> supplies</InventoryComponents> </InventoryComponents> contextRef=“D<InventoryCostBasis contextRef=“D2006”> ”>lower of cost or 2006”> market</InventoryCostBasis > </InventoryCostBasis contextRef=“D<ValuationMethod contextRef=“D2006”> ”>FIFO</ValuationMethod> 2006”> </ValuationMethod> <Value2006 contextRef=“D-2006” <Value2006 contextRef=“D-2006” unitRef=“USD”decimals=“0”>45594</Value2 </Value2 unitRef=“USD”decimals=“0”> </Value 006> 006> <Value2005 contextRef=“D-2006” <Value2005 contextRef=“D-2006” unitRef=“USD”decimals=“0”>$34,456</Value unitRef=“USD”decimals=“0”> </Value 2005> 2005> Unstructured Text Inventory Inventory consists of produce purchased for resale and supplies and are stated at the lower of cost or market using the first-in, first-out (FIFO) method. Inventory as of December 31, 2006 and 2005 amounted to 45, 34,456, $45,594 and $34,456 respectively. Courtesy: Mr. Charles Hoffman, AICPA Presented By: CA. Nirmal Ghorawat 29
    30. 30. TERMS IN XBRL TAXONOMY LABELS CONCEPTS An XBRL TAXONOMY is a dictionary of financial reporting terms or concepts which the XBRL language uses, and it helps to define specific tags (LABELS) for individual items of data (CONCEPTS) . Presented By: CA. Nirmal Ghorawat 30
    31. 31. TERMS IN XBRL INSTANCE DOCUMENT An XBRL instance document is an XML file, designed to be read only by computers, that contains business reporting information and represents a collection of financial facts using tags from one taxonomies. or more XBRL taxonomies. Presented By: CA. Nirmal Ghorawat 31
    32. 32. XBRL TAXONOMY Presentation Presentation Presentation Presentation Presentation Presentation Comptant Comptant 現金及び現金等価物 Деньгиenїх etэквиваленты Гроші & Cashеквіваленти Kas ихEquivalents 现金与现金等价物 Geld &и Geldmiddelen Cash та Geld nahe Mittel Equivalents Standardization References Label GAAP I.2.(a) Instructions Ad Hoc disclosures cashCashEquivalentsAndS hortTermInvestments XBRL Item Calculation Cash = Currency + Deposits Validation Formulas Cash ≥ 0 Contexts US $ FY2004 Budgeted Courtesy: Ms. Liv Watson, XII Presented By: CA. Nirmal Ghorawat 32
    33. 33. TERMS IN XBRL PRESENTATION LINKBASE • Part of Taxonomy • Defines relationships that arrange elements allowing them to NAVIGATE the parenttaxonomy content in parentchild structures (hierarchies). (hierarchies). Presented By: CA. Nirmal Ghorawat 33
    34. 34. TERMS IN XBRL CALCULATION LINKBASE • Part of Taxonomy • Defines ADDITIVE (+ OR -) relationships between NUMERIC items in taxonomy parentexpressed as parent-child (hierarchies). structures (hierarchies). Presented By: CA. Nirmal Ghorawat 34
    35. 35. TERMS IN XBRL REFERENCE LINKBASE • Part of Taxonomy • LINKS the Concepts to their Statutory References or to authoritative (Accounting Standards) references in the GAAP. GAAP. Presented By: CA. Nirmal Ghorawat 35
    36. 36. TERMS IN XBRL FORMULA LINKBASE • Part of Taxonomy • Defines LOGICAL relationships between NUMERIC items in taxonomy parentexpressed as parent-child (hierarchies). structures (hierarchies). Presented By: CA. Nirmal Ghorawat 36
    37. 37. TERMS IN XBRL BUSINESS RULES • FORMAL statements that defines or constrains some aspect of the concepts in the taxonomy or to control or influence their behaviour in DOCUMENT. the INSTANCE DOCUMENT. Presented By: CA. Nirmal Ghorawat 37
    38. 38. AFTER XBRL..!! yes… we YES can..!! Courtesy: Ms. Liv Watson, XII Presented By: CA. Nirmal Ghorawat 38
    39. 39. AFTER XBRL..!! FINANCIAL REPORTING IN THE ERA OF XBRL WILL BE AUTOMATED. AUDIT SOFTWARE PACKAGE COMPANY ERP DATA REPOSITORY REGULATOR MANUAL PROCESSES AUDITORS MANUAL PROCESSES REPORTING COMPANY Presented By: CA. Nirmal Ghorawat USERS 39
    40. 40. AFTER XBRL..!! FINANCIAL REPORTING IN THE ERA OF XBRL WILL BE AUTOMATED. AUDIT SOFTWARE PACKAGE COMPANY ERP DATA REPOSITORY APPLICATIONS ARE INTERACTING WITHOUT HUMAN INTERVENTION MANUAL MANUAL (m2m – machine 2 machine) PROCESSES PROCESSES AUDITORS REPORTING COMPANY Presented By: CA. Nirmal Ghorawat REGULATOR USERS 40
    41. 41. BENEFITS OF XBRL !! what Bar Code has done for Product Distribution, XBRL will do for Financial & Business Reporting Presented By: CA. Nirmal Ghorawat 41
    42. 42. AFTER XBRL..!! Accounting ERP Printed Financials XBRL “In-house” Investors Regulatory Filings Analysts XBRL Internal Reports XBRL Management Regulators Analytics Spreadsheets Creditors XBRL Documents Other Sources Web sites Presented By: CA. Nirmal Ghorawat 42
    43. 43. XBRL USES..!! Company internal and external Financial Reporting Reporting to all types of Regulators Tax and Financial Authorities Corporate Regulators Loan Reports to Banks / Central Banks Exchange of Information between Government Departments Can be used for a wide range of other financial and statistical data which needs to be stored, exchange and analysed. Presented By: CA. Nirmal Ghorawat 43
    44. 44. BENEFITS OF XBRL !! Cost Savings, Greater Efficiency and Improved Accuracy and reliability Enhanced Comparability create, To all those who create, transmit, use or analyze financial and business information Presented By: CA. Nirmal Ghorawat 44
    45. 45. BENEFITS OF XBRL !! "Through Internet delivery, XBRL will also provide analysts and investors with extensible financial data to make informed decisions about the company. We see XBRL as not only the future standard for publishing, delivery and use of financial information over the Web, but also as a logical business choice.“ - John Connors, Chief Financial Officer, Microsoft Presented By: CA. Nirmal Ghorawat 45
    46. 46. XBRL MYTHS..!! XBRL is Complex & Difficult an Accounting Standard a Computer Program a Limited Chart of Accounts Proprietary Information Standard or software XBRL does not change what Reporting / Regulatory is Reported, only how it is burden Reported…!! Presented By: CA. Nirmal Ghorawat 46
    47. 47. XBRL EVERYWHERE!! WHERE? Presented By: CA. Nirmal Ghorawat Source: www.xbrlplanet.org 47
    48. 48. XBRL IN PLAIN ENGLISH How we submitted Financial Information till date..!! Particulars 31/03/2011 31/03/2010 Cash and Cash Equivalents 20,000 15,000 How we will submit Financial Information in XBRL..!! <in-gaap:CashCashEquivalents contextRef="I2011 I2011" gaap:CashCashEquivalents> <in-gaap:CashCashEquivalents contextRef="I2010" I2010 gaap:CashCashEquivalents> id="TAB1" TAB1 decimals="0" TAB 0 unitRef="INR 20000 INR">20000 INR 20000</inid="TAB2" TAB2 decimals="0" TAB 0 unitRef="INR 15000</inINR">15000 INR 15000 Presented By: CA. Nirmal Ghorawat 48
    49. 49. XBRL IN PLAIN ENGLISH Decoding the XBRL Label / Tag TAG LABEL TAG ID DECIMALS <in-gaap:CashCashEquivalents id="TAB1 decimals="0“ TAB1" TAB1 0 contextRef="I2011 unitRef="INR 20000</in-gaap:CashCashEquivalents> I2011" INR">20000 I2011 INR CONTEXT UNIT VALUE Presented By: CA. Nirmal Ghorawat TAG LABEL 49
    50. 50. The story so far..!! XBRL is all about tagging … but these tags are electronic A bit like a bar code … but for financial reporting concepts Presented By: CA. Nirmal Ghorawat 50
    51. 51. A bit like a bar code … • But instead of tagging a tin of beans • … we’re tagging an item in a set of accounts HOW TO DO THE TAGGING? Presented By: CA. Nirmal Ghorawat 51
    52. 52. YEAR- END ACCOUNTS FILING Bookkeeping Year-end accounts Presented By: CA. Nirmal Ghorawat Filing 52
    53. 53. POST-PRODUCTION TAGGING Extra process Bookkeeping Year-end accounts NO CHANGE IN THE PRESENT PROCESS Presented By: CA. Nirmal Ghorawat Tagged accounts Software adds XBRL tags EXTRA PROCESS 53
    54. 54. ACCOUNTS PRODUCTION SOFTWARE Tagged accounts Bookkeeping Year-end accounts Software adds XBRL tags + other adjustments and inputs INTEGRATED PROCESS Presented By: CA. Nirmal Ghorawat 54
    55. 55. Presented By: CA. Nirmal Ghorawat 55
    56. 56. SESSION 2 OVERVIEW XBRL IN INDIA o XBRL INDIA – ESTABLISHED JURISDICTION OF XII o REGULATORS ADOPTING XBRL IN INDIA o MCA21 FILING & CONVERSION o XBRL CERTIFICATION o XBRL ~ AN OPPORTUNITY..!! Presented By: CA. Nirmal Ghorawat 56
    57. 57. XBRL IN INDIA XBRL India is the Indian Jurisdiction of XBRL International. is a Company registered under Section 25 of Companies Act, 1956 is incorporated for managing the affairs of Indian Jurisdiction of XBRL International. Its main objective is to promote and encourage the adoption of XBRL in India as the standard for electronic business India. reporting in India. Presented By: CA. Nirmal Ghorawat 57
    58. 58. XBRL IN INDIA XBRL India is the Indian Jurisdiction of XBRL International. is a Company registered under Section 25 of Companies Act, 1956 is incorporated for managing the affairs of Indian Jurisdiction of XBRL International. Its main objective is to promote and encourage the adoption of XBRL in India as the standard for electronic business India. reporting in India. Presented By: CA. Nirmal Ghorawat 58
    59. 59. XBRL IN INDIA IMPLEMENTED Capital Adequacy Reporting by Banks as per Basell II Norms MANDATED e-Filing of Annual Reports for a class of Companies from April 1, 2011 Presented By: CA. Nirmal Ghorawat 59
    60. 60. XBRL IN INDIA UNDER DEVELOPMENT “SUPER-D” FILING for ALL LISTED COMPANIES / MUTUAL FUNDS UNDER DEVELOPMENT XBRL based REGULATORY INFORMATION MANAGEMENT SYSTEM (RIMS) Presented By: CA. Nirmal Ghorawat 60
    61. 61. XBRL IN INDIA XBRL will change the way we COMMUNICATE with REGULATORS in the coming years..!! Presented By: CA. Nirmal Ghorawat 61
    62. 62. MCA XBRL IMPLEMENTATION APPROACH PHASE I – 1/APRIL/2011 SELECT Class of Companies All Listed Companies & their Subsidiaries Companies with Paid up Capital > 5 crores Companies with Turnover > 100 crores However, Banking, NBFC, Insurance & Power Sector companies are excluded. PHASE II – 1/APRIL/2012 (Including ALL COMPANIES Banking, NBFC, Insurance & Power Sector Companies) Existing C & I (Commercial & Industrial) Taxonomy to be UPDATED & MAINTAINED to conform with REVISED VI. SCHEDULE VI. New Taxonomy(ies) for Banking, NBFC, Insurance & Power Sector Companies. Presented By: CA. Nirmal Ghorawat Source: http://xbrl.icai.org 62
    63. 63. MCA XBRL IMPLEMENTATION APPROACH PHASE I – 1/APRIL/2011 Companies WHICH ARE 1. NOT Listed Companies or their Subsidiaries 2. Companies with Paid up Capital < 5 crores 3. Companies with Turnover < 100 crores 4. Banking, NBFC, Insurance & Power Sector companies Are EXCLUDED. Presented By: CA. Nirmal Ghorawat V O L U N T A R Y 63
    64. 64. MCA21 XBRL FILING PROCESS Taxonomy EXTENSIONS are NOT ALLOWED SEPARATE INSTANCE DOCUMENTS FOR BALANCE SHEET & PROFIT & LOSS ACCOUNT AND IF APPLICABLE : CONSOLIDATED BALANCE SHEET & CONSOLIDATED PROFIT & LOSS ACCOUNT Presented By: CA. Nirmal Ghorawat FORM 23AC BS FORM 23ACA PL 64
    65. 65. MCA21 XBRL SCOPE FORM 23AC – BALANCE SHEET BALANCE SHEET A– FORM 23AC A– P&L ACCOUNT SCHEDULES RELATED PROFIT & LOSS ACCOUNT TO BALANCE SHEET SCHEDULES RELATED TO CASH FLOW STATEMENT PROFIT AND LOSS NOTES ON ACCOUNTS ACCOUNT DIRECTORS RESPONSIBILITY STATEMENT AUDITOR’S REPORT DIRECTOR’S REPORT GENERAL INFORMATION ABOUT THE COMPANY SIGNATORIES TO THE BALANCE SHEET Presented By: CA. Nirmal Ghorawat 65
    66. 66. MCA21 XBRL MUTUALLY EXCLUSIVE EXTENDED LINKS BALANCE SHEET SOURCE & APPLICATION OF FUNDS (VERTICAL) TOTAL ASSETS AND LIABILITIES (HORIZONTAL) MAIN INCOME STATEMENT CASH FLOW STATEMENT ALTERNATIVE DIRECT METHOD INDIRECT METHOD Presented By: CA. Nirmal Ghorawat 66
    67. 67. MCA21 XBRL INSTANT (I) “AS AT” DURATION (D) ABSTRACT “FOR THE PERIOD ENDED ON” GROUP OF ELEMENTS TUPLES TABLE OF ELEMENTS DETAILED TAGGING BLOCK TEXT TAGGING Presented By: CA. Nirmal Ghorawat 67
    68. 68. MCA21 XBRL Filing Manual Use of Footnotes Link on Non-financial information in Annual Reports to the Concepts for eg. Security furnished in the case of Secured Loans Whenever any value or information are adjusted or clubbed to match the calculation relationships (and thus are different from the actual financial statements of the company) – XBRL Filing Manual Presented By: CA. Nirmal Ghorawat 68
    69. 69. MCA21 XBRL Filing Manual HTML Guidelines Only specific HTML tags are allowed in XBRL Instance Document “Clean HTML” Converters – available with the Filing Tool / Freely available on the Internet. Warning Message during the Validation Presented By: CA. Nirmal Ghorawat 69
    70. 70. MCA21 XBRL FILING PROCESS FINANCIAL INFORMATION ON MCA PORTAL TAXONOMY FORM 23AC FORM 23ACA TAGGING INSTANCE DOCUMENT ATTACH VALIDATION OFFLINE Presented By: CA. Nirmal Ghorawat PRE-SCRUTINY ONLINE 70
    71. 71. MCA21 XBRL PROPER XBRL FILING VALIDATION AS PER MCA VALIDATION TOOL CERTIFICATION OF XBRL FINANCIAL STATEMENTS BY PRACTISING PROFESSIONAL Presented By: CA. Nirmal Ghorawat 71
    72. 72. ICAI Guidance Note on XBRL Certification Objective To provide guidance to the practitioners in certification of XBRL formatted statements in terms of the requirements of the Ministry’s General Circular No. 57/ 2011 dated July 28, 2011 read with MCA’s General Circular No. 43/2011 dated July 07, 2011. Presented By: CA. Nirmal Ghorawat 72
    73. 73. ICAI Guidance Note on XBRL Certification General Approach to Preparation of XBRL Financial Statements Completeness Mapping Accuracy Structure Presented By: CA. Nirmal Ghorawat 73
    74. 74. ICAI Guidance Note on XBRL Certification Management Responsibility - Primary Selection, Maintenance and Testing of Taxonomy. Accurate Tagging & Mapping of Data Elements to XBRL reports.. Enforcing change Management Procedures for XBRL processes Presented By: CA. Nirmal Ghorawat 74
    75. 75. ICAI Guidance Note on XBRL Certification Practitioner’s Responsibility To certify that the said XBRL financial statements fairly present, in all material respects, the audited financial statements of the Company from which such XBRL financial statements have been prepared, in accordance with the taxonomy prescribed by MCA. Presented By: CA. Nirmal Ghorawat 75
    76. 76. ICAI Guidance Note on XBRL Certification Practitioner’s Responsibility - Procedures Compare Source Document (Annual Report) with XBRL Instance Document (Human Readable generated through relevant converter. Management Representation Letter Presented By: CA. Nirmal Ghorawat 76
    77. 77. XBRL - AN OPPORTUNITY ..!! COMPLIANCE WITH MCA REGULATORY ENVIRONMENT IMPACT ASSESSMENT OF XBRL ON MIS MAPPING / TAGGING OF LINE ELEMENTS IN MIS (ACCOUNTS MASTER) WITH XBRL TAXONOMY CONSIDERING THE NEED FOR EXTENSION TAXONOMY Presented By: CA. Nirmal Ghorawat 77
    78. 78. Presented By: CA. Nirmal Ghorawat 78
    79. 79. Presented By: CA. Nirmal Ghorawat 79

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