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X B R L Filing In M C A 21 For Chartered Accountants

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  • 1. BRIEF NOTE ON XBRL FILING Balakrishna & Co Chartered Accountants# 24, ‘Comfort Tower’, 10th Cross, Wilson Garden, Bangalore – 560 027 Contact Person: CA Prakash S V Email: contact@balakrishnaandco.com www.balakrishnaandco.com Phone: +91 9448080886
  • 2. XBRL FILING 1. What is XBRL? XBRL or the eXtensible Business Reporting Language is a language for the electronic communication of business and financial data. It provides a common electronic format for business reporting and can make the process of creating, distributing, reporting and analyzing the information more efficiently and effectively. Using XBRL would make it possible to store financial information in a computer readable format. 2. How does XBRL work? XBRL makes the data readable, with the help of two documents – Taxonomy and Instance Document. Taxonomy 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. 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. Taxonomies are based on the regulatory requirements and standards which are to be followed by the companies. Accordingly, depending on the requirements of every country, there can be country-specific taxonomies. In India, the taxonomy has been developed by the Ministry of Corporate Affairs (MCA), based on the requirements of: Schedule VI of Companies Act; The Accounting Standards; and SEBI Listing requirements. 3. Who is required to file XBRL Financial Statements in India The Ministry of Corporate Affairs, Government of India, vide its General Circular No. 37/2011, dated June 07, 2011 has required the following class of companies (except banking companies, insurance companies, power companies and the Non Banking Financial Companies) to file the financial statements in XBRL form only from the year 2010 – 2011:. All companies listed in India and their Indian subsidiaries All companies having a paid up capital of Rs 5 crore and above; and All companies having a turnover of Rs 100 crore and above.Balakrishna & Co. |Bangalore| contact@balakrishnaandco.com | +91 94480 80886 Page 2
  • 3. XBRL FILING 4. Can company voluntarily file financial statements in XBRI mode for the year 2010-11Yes encouraged, such a company need not file the Financial Statements in PDF Format 5. Whether MCA provide XBRL Software? XBRL Instance Document Creation Software has to be purchased from the software vendors in the market. This software is used to create XBRL instance documents that would be uploaded on the MCA portal. MCA21 system will provide a facility for validation of the instance document and filing of the same. MCA is not recommending any specific XBRL software. 6. Who will certify the XBRL filing?The certification of XBRL filing would be done by the professional as before. The professional may use XBRLviewer tool to satisfy himself about the authenticity of XBRL document as per the audited financialstatements. 7. What are the steps involved in filing financial Statements in XBRL on MCA Portal? Obtaining audited financial statements. These audited financial statements would preferably be in Excel and/ or Word format. Preparation of the source document based on the audited financial statement for XBRL conversion. Mapping the source document to the Target Taxonomy as mandated by MCA. Validating the mapped document to create instance document. Creating XBRL instance document Validating XBRL Instance Document using XBRL Validation Tool provided by MCA Eliminating errors arising out of validation based on error logs. Pre-scrutiny of the instance document Convert to pdf and verify the contents of the instance document Attach instance document to the Form 23AC-XBRL and Form 23ACA-XBRL Submitting the Form 23AC-XBRL and Form 23ACAXBRL on the MCA portal Separate instance documents need to be created for the following: (i) Stand Alone Balance sheet of the company (ii) Stand Alone Profit and Loss Account of the company (iii) Consolidated Balance sheet of the company (iv) Consolidated Profit and Loss Account of the company The instance document should contain the financial information for both the current as well as the previous financial year.Balakrishna & Co. |Bangalore| contact@balakrishnaandco.com | +91 94480 80886 Page 3
  • 4. XBRL FILING 8. Detailed steps involved in creating financial Statement in XBRL i. Map Company’s each financial statement element to a corresponding element in published taxonomyCompanies have the option to create their own XBRL documents in house or to engage a third party toconvert their financial statements into XBRL form. The first step in creation of an instance document is to dotagging of the XBRL taxonomy elements with the various accounting heads in the books of accounts of thecompany. This would create the mapping of the taxonomy elements with the accounting heads so that theaccounting information can be converted into XBRL form. Selecting the appropriate elements for somefinancial statement elements may require a significant amount of judgment. The mapping should be reviewedbefore proceeding further as the complete reporting would be dependent on the mapping.In case any information is present in the financial statements for which corresponding tag/element is notavailable in the taxonomy, then the same needs to be captured in the next-best-fit element in the taxonomyor should be included under the corresponding ‘Others’ element. Further, it is imperative to include footnotew.r.t. the same while preparing the instance document. ii. Create instance document for Balance sheet and Profit and Loss AccountOnce the tagging of financial statement elements with the published taxonomy elements is done, the nextstep is to create the instance document. An instance document is a XML file that contains businessreporting information and represents a collection of financial facts and report-specific informationusing tags from the XBRL taxonomy. iii. Download MCA XBRL validation tool from MCA portalA tool has been provided on the MCA XBRL portal for validating the generated XBRL instance document.Validating the instance document is a pre requisite before filing the balance sheet and profit & loss accounton MCA portal. You are required to download the tool from the portal and validate the instance documentbefore uploading the same. The MCA XBRL validation tool can be downloaded from the XBRL website of theMinistry iv. Use the tool to validate the instance documentThe next step is to validate the instance document using validation tool provided by MCA. The followingvalidations shall be performed by the tool- Validating that the instance document is as per the latest and correct version of taxonomy prescribed by MCA All mandatory elements have been entered Other business rules as specified by MCABalakrishna & Co. |Bangalore| contact@balakrishnaandco.com | +91 94480 80886 Page 4
  • 5. XBRL FILING Other validations as per taxonomy v. Perform pre-scrutiny of the validated instance document through the tool Once the instance document is successfully validated from the tool, the next step is to pre-scrutinise the validated instance document with the help of the same tool. For pre-scrutinizing the instance document, a working internet connection shall be required. In the Pre-scrutiny, the server side validations (i.e. validations which are to be validated from the MCA21 system) shall be performed. vi. Final verification post pre-scrutiny of the document Once the instance document has been successfully pre-scrutinized, the next step is to generate pdf by using ‘Export to pdf’ functionality in the tool to verify the final instance document. It is imperative that the company and the professional certifying the instance documents should use this feature to verify the accuracy of the instance document.vii. Attach instance document to the Form 23AC-XBRL and Form 23ACA-XBRL There shall be a separate set of Form 23AC-XBRL and Form 23ACA-XBRL available on the MCA portal for filing in XBRL form. First fill up the Form 23AC-XBRL and Form 23ACA-XBRL. Thereafter, attach the validated and pre-scrutinised instance document for Balance sheet to Form 23AC-XBRL. Similarly, the instance document for Profit and Loss account is to be attached to Form 23ACA-XBRL. Separate instance documents need to be attached w.r.t. Standalone financial statements and consolidated financial statements. viii. Submitting the Form 23AC-XBRL and Form 23ACA- XBRL on the MCA portal After the forms are filled, you are required to perform pre-scrutiny of the form, sign the form and then upload the same as per the normal eForm filing process. It shall be validated that the attached instance documents are validated and pre-scrutinised from the XBRL validation tool. ix. Viewing of balance sheet and profit and loss submitted in XBRL form on MCA portal The XBRL instance documents submitted along with Form 23AC-XBRL and 23ACA-XBRL are in machine readable format. Therefore, for viewing the same in a human readable format, these shall be converted into human readable format by the MCA21 system. For viewing the same on MCA portal and for taking certified copies of the same, these converted documents shall be made available. Balakrishna & Co. |Bangalore| contact@balakrishnaandco.com | +91 94480 80886 Page 5
  • 6. XBRL FILINGIllustrative Engagement Letter: (Letterhead of the practitioner) To the Board of Directors of …………. You have requested that we convert the audited financial statements of ………………… Company Limited, which comprise the Balance Sheet as at March 31, 2011, and the Statement of Profit & Loss, and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information to XBRL mode financial statements and also certify that these XBRL financial statements fairly present in all material respects, the audited financial statements of the company for the year ended March 31, 2011, in accordance with the taxonomy specified by the Ministry of Corporate Affairs for filing of the financial statements in the XBRL mode. We are pleased to confirm our acceptance and our understanding of this certification engagement by means of this letter. Our engagement will be conducted on the basis that the management acknowledges and understands that they have responsibility: (a) For the preparation of XBRL financial statements in accordance with the taxonomy prescribed by the Ministry of Corporate Affairs. This includes: Ensuring Completeness, Accuracy, Mapping and Structure of these XBRL financial statements. Ensuring existence and operation of appropriate controls over the process of conversion of audited financial statements to XBRL financial statements. (b) To provide us with: 1. Audited financial statements of ……………….Company Limited, viz. Audited Balance Sheet of …………………….. Company Limited for the year ended March 31, 2011 preferably in MS Excel format; Audited Profit and Loss Account of ………………… Company Limited for the year ended March 31, 2011 preferably in MS Excel Format; Audited Cash Flow Statement of ………………… Company Limited for the year ended March 31, 2011 preferably in MS Excel Format; Statement of Significant Accounting Policies and Notes to Accounts of ………………… Company Limited for the year ended March 31, 2011 preferably in MS Word format; Audit report of ………………… Company Limited for the year ended March 31, 2011; Director’s Report of ………………… Company Limited for the year ended March 31, 2011; and A copy of the Annual Report of ………………… Company Limited for the year ended 31 March, 2011 (ii) Access, at all times, to all information, including the books, account, vouchers and other records and documentation, of the Company, whether kept at the head office of the company or elsewhere, of which [management] is aware that is relevant to the certification of XBRL mode financial statements; (iii) Additional information that we may request from [management] for the purpose of theBalakrishna & Co. |Bangalore| contact@balakrishnaandco.com | +91 94480 80886 Page 6
  • 7. XBRL FILING certification; and (iv) Unrestricted access to persons within the entity from whom we determine it necessary to obtain evidence. This includes our entitlement to require from the officers of the Company such information and explanations as we may think necessary for the performance the certification engagement. We will conduct our certification in accordance with the Guidance Note on Certification of XBRL Financial Statements, issued by the Institute of Chartered Accountants of India (ICAI). As part of our engagement, we will request from [management and, where appropriate, those charged with governance], written confirmation concerning representations made to us in connection with the certification. We look forward to full cooperation from your staff during our certification engagement. [Insert other information, such as fee arrangements, billings7 and other specific terms, as appropriate.] Our certification does not constitute an audit conducted in accordance with the Standards on Audit issued by the Institute of Chartered Accountants of India. Accordingly, we will not express an opinion on the truth and fairness of the XBRL financial statements. Accordingly, as a part of our engagement we will also not perform procedures to verify the completeness and accuracy of the information provided by the management or such procedures as would enable us to express an opinion on the effectiveness of the design, implementation and monitoring of controls by the management over the preparation of XBRL financial statements. We will, however, bring to your attention any material errors in these XBRL financial statements of which we become aware during our certification process. Upon completion of our engagement, we will provide you with the XBRL mode a certification on XBRL financial statements referred to above. A draft of the certificate is attached for your reference. The form and content of our certificate may need to be amended in the light of our findings. Please sign and return the attached copy of this letter to indicate your acknowledgement of, and agreement with, the arrangements for our certification of the XBRL financial statements including our respective responsibilities. XYZ & Co. Chartered Accountants ………………………… (Signature) 7 For example, “Our fees will be billed as the work progresses”. Date : (Name of the Member) Place : (Designation8) Acknowledged on behalf of Company by ……………………………. (Signature) Name and Designation DateBalakrishna & Co. |Bangalore| contact@balakrishnaandco.com | +91 94480 80886 Page 7
  • 8. XBRL FILINGIllustrative Management Representation Letter: M/s ………………………. Chartered Accountants We are providing this letter in connection with your engagement to convert the audited financial statements of …………………. (the “Company”) as of March 31, 20XX, and related financial statement schedules(s) to XBRL financial statements for being furnished by the Company to the Ministry of Corporate Affairs (“MCA”) vide their General Circular No. 43/2011 dated July 07, 2011 and also certification of aforementioned XBRL financial statements, prepared from the audited financial statements for the aforesaid period. The term “XBRL-tagged data” in this letter refers to the Company’s XBRL instance document, and the related taxonomy extension schema, label linkbase, calculation linkbase, presentation linkbase, and definition linkbase documents, all of which were provided to you on [specify date documents were provided or file names with date(s)]. We confirm that we are responsible for: a. The XBRL-tagged data relating to above mentioned financial statements [and related financial statement schedule(s)]; the completeness, accuracy, and consistency of our XBRL-tagged data; and the related assertions; b. Identifying the applicable XBRL-tagged data filing requirements, determining that the substance of the XBRLtagged data satisfies the regulatory requirements and filing the XBRL-tagged data in a form and manner that satisfies any regulatory or other requirements of the MCA to which the XBRL-tagged data is to be submitted; c. The design, implementation, effectiveness, and monitoring of controls over the preparation and tagging of the Company’s financial statement data and over the submission of the XBRL-tagged data to the MCA; d. Evaluating and monitoring the completeness, accuracy, and consistency of our XBRL-tagged data, including the work performed by any third parties in assisting us with the preparation of our XBRL-tagged data; and e. Complying with all applicable laws and regulations. We confirm, to the best of our knowledge and belief, the following representations made to you during your Assistance in XBRL filing engagement: 1. All known matters related to the XBRL-tagged data relating to our financial statements or the related assertions have been disclosed to you. 2. We have made available to you all: a. Financial records and related data b. Documentation relevant to the preparation of the XBRL files, such as [specify documents, e.g., information provided to a third party, tagging worksheets] c. Output of all validation reports. 3. There have been no communications from regulatory agencies affecting the XBRL-tagged data relating to our financial statements referred to above [except for [insert appropriate description]]. 4. We have no knowledge of any fraud or suspected fraud affecting the entity’s XBRL-tagged data. 5. We have no knowledge of any significant matters contrary to your findings [except for [insert appropriate description]]. 6. [Insert any specific representations appropriate for this engagement].Balakrishna & Co. |Bangalore| contact@balakrishnaandco.com | +91 94480 80886 Page 8
  • 9. XBRL FILING (Name of Chief Executive Officer and Title) (Name of Chief Financial Officer and Title)Illustrative Format of Certificate on XBRL FinanciaL Statements To The Board of Directors of ……………… Company Limited We have examined the attached Balance Sheet of ……………. Company Limited (“the Company”) as at March 31, 2011, and the Profit and Loss Account and the Cash Flow Statement of the Company (“the Financial Statements) for the year ended on that date, both annexed thereto, prepared by the Company in the eXtensible Business Reporting Language (XBRL) mode (“the XBRL financial statements”). These XBRL financial statements have been prepared on the basis of the audited financial statements of the Company for the year ended March 31, 2011, on which we/ M/s…….. Chartered Accountants (whichever is applicable) have expressed an opinion vide our/ their (whichever is applicable) Audit Report dated , 2011. The Management of the Company is responsible for the preparation of the XBRL financial statements in accordance with the taxonomy specified by the Ministry of Corporate Affairs for filing of the financial statements in the XBRL mode. Our responsibility is to certify the XBRL financial statements based on our examination, which was conducted in accordance with the Guidance Note on Certification of XBRL Financial Statements issued by the Institute of Chartered Accountants of India.Based on our aforesaid examination and to the best of our knowledge and belief andaccording to the information, explanations and representations given to us by themanagement of the Company, we certify that these XBRL financial statements fairly present, in all materialrespects, the aforementioned audited financial statements of the Company for the year ended March 31,2011, in accordance with the taxonomy specified by the Ministry of Corporate Affairs for filing of thefinancial statements in the XBRL mode.This Certificate is intended solely for your information and for purposes of filing of the Company’s financialstatements in the XBRL mode in accordance with the Ministry of Corporate Affairs’ General Circular No.43/2011 dated 7thJuly, 2011 and is not to be used, referred to or distributed for any other purpose withoutour prior written consent. For ………………………… Chartered Accountants (Firm Registration No. ) ………………………………… (Name of the member) Designation (Membership No. ) Place:Balakrishna & Co. |Bangalore| contact@balakrishnaandco.com | +91 94480 80886 Page 9