Transforming Data into Knowledge: leveraging XBRL tools ANIL KUMAR BHARDWAJ DIRECTOR E-Governance Ministry of Corporate Affairs Government of India
Challenges in Current Financial Reporting Financial Explanatory Othersources systems Disclosure information XLS Docformats PDF Paper Proprietary format methodsreceivers Rating Investors Analysts Lenders Regulators agencies 2
XBRL - An idea whose time has come... “XBRL is ..perhaps the most revolutionary change in financial reporting since the first general ledger” - Accounting Today “A Breakthrough Idea”3
XBRL XBRL stands for Extensible Business Reporting Language. XBRL was developed specifically to communicate information between businesses and other users of financial information, such as analysts, investors and regulators. XBRL provides a common, electronic format for business reporting. XBRL improves the quality of data reported as there are build-in validation checks in the XBRL taxonomy & business rules. XBRL enables quick and accurate data analysis. XBRL could also enable development of Single Reporting Platform for all Govt compliance by companies.
Key Benefits Generation Enter data once, Render in many forms Standardized, yet extensible Reduce costs by automating tasks Transmission Facilitates electronic exchange Automates collection, immediate validation through flexible rules Consumption Potentially real time information Interactive, flows into proprietary applications Shifts focus to analysis, facilitates judgement, quick generation of information and reports Technology independent Open, royalty free, independent standard, low cost Quality, Efficiency, Cost Savings5
Business Benefits from XBRL Improved Ease of Central data quality Corporate Exchange of repository standardized data Other Govt. Compliance DepartmentsImproved - Standardized as per XBRLrequired in Reporting the taxonomy Ease in data mining / Ease of data Technical Business EWS availability Scrutiny Intelligence
Beneficiaries Of XBRL Data • Regulators • Auditors • Corporate Finance and Control • Equity and Credit Analysts • Investment Bankers • Investors 7
Benefits of XBRL - RegulatorsProvides a common framework of definitions and facilitates easiercomparison of multiple companiesUse of standard taxonomyImprove the accuracy, quality and transparency of corporateinformationBusiness rules and inbuilt validations help to ensure data qualityMakes data more granular, more extractableData becomes machine readable and so data analysis can beautomatedEarly availability of processed informationQuick generation of information and reportsCollaborative nature of XBRL process provides regulators with input on the standards via enhanced communication and cooperation between regulators and respective industry organisations8
Benefits of XBRL – Regulators contd.Improved Early Warning System, Sophisticated Technical Scrutinycan be designedEnables development of Single Reporting Platform for allGovernment compliance by companiesAutomated analysisHelps to establish the flow of funds within the group anddiscrepancies, if any, can be flaggedEnsures cross verification of dataInformation submitted across companiesInformation submitted over a period by the same companyDepicting the hierarchy structure of the group companies is madeeasy9
MCA’s XBRL Notification Ministry has mandated compulsory filing of Financial Statements (Balance Sheet, Profit & Loss Account, Director’s Report, etc) filling in XBRL format for: ◦ All Listed Companies and their Indian Subsidiaries ◦ All companies with paid up capital more than Rs. 50 Million ◦ All companies with turnover more than Rs. 1 Billion Power Companies, Non Banking Finance Companies, Insurance Companies and Banking Companies were exempted from XBRL filing in FY 2010-11.
XBRL – Information Content Financial Information Balance Sheet and detailed Schedules of Balance sheet Profit and Loss account and detailed Schedules of P&L account Cash Flow Statement Accounting Standard disclosures Subsidiary Information Related party Information Non-Financial Information Notes to Accounts Directors’ Report Auditor’s Report Accounting Standard disclosures12
XBRL Process• Map a/c concepts with Taxonomy elements.• Instance Document Generation. XBRL Validations, inbuilt in the software. Pre-scrutiny, Server validations by MCA. In-built Viewer to check accuracy. Separate e-Form 23AC & 23ACA for filing XBRL attachment. Submit e-Forms on MCA portal. 13
MCA Initiatives on XBRL• Notification of XBRL Rules, 2011, Taxonomy and new e-forms were issued in October 2011.• Based upon mandatory requirements and Business Rule, MCA has developed a validation tool to accept only complete and accurate XBRL document on MCA21 portal. Validation tool also contains a XBRL viewer to enable filer to see the ‘human readable’ format of XBRL document.• Filings of XBRL documents started on 06.10.2011 and till date more than 23600 companies have filed their financial statements in XBRL. This is more than 85 % of target companies.
XBRL data – Analysis by MCAGeneration of alertsSystem based rules to identify potential problem areasComprehensive company pageDetailed financial information, alerts, XBRL documents, etc.Holding - Subsidiary detailsDetailed relationship structure can be analysedRelated party transactionsAnalysis of Inter-company transactionsGroup company informationIdentification of group companies based on criteria likecommon directors, common addresses, common auditors15
Implementation Approach – way forwardXBRL taxonomy for C&I companies being modified for changes based on Revised Schedule VI and suggestions received from stake holdersTaxonomies being finalised/ under development for banking, insurance, power companies and NBFCsTaxonomy also being prepared for Cost Audit reporting 23
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