Volume 3, Issue 3

21st June, 2011

Business Alert
Use of XBLR Format for Financial Statements

The Ministry of Corporate Affairs (MCA) vide its circular no. 37/2011 dated 07/06/2011 has mandated certain class of companies to file Balance sheets and Profit and loss account along with Directors’ and Auditors’ Report for the year 2010- 2011 onwards by using the XBRL Taxonomy. The Financial Statements required to be filed in XBRL format would be based upon the existing Schedule VI of Companies Act, 1956 and the currently prevailing Indian Accounting Standards. The Taxonomy Business Rules, validity tools, etc. required for the preparation of the
above documents in XBRL format as per the existing Schedule VI, of Companies Act, 1956 and the currently prevailing Indian Accounting Standards have been prepared and hosted on the website of the Ministry at www.mca.gov.in . Thi s new requirement covers the entire annual financial statements and quarterly filings as per Clause 41 of the SEBI listing agreement and goes beyond into certain aspects of business information, directors’ report and auditors’ report (including clauses as per Companies Auditors’ Report Order).


Phase I Companies:

The following classes of companies have to file the financial statements using XBRL from the year 2010-2011:

  1. All companies listed in India and their Indian subsidiaries;
  2. All companies having a paid up capital of Rs. 5 Crore and above;
  3. All companies having a turnover of Rs 100 Crore and above. Banking companies, insurance companies, power companies and Non Banking Financial Companies (NBFCs) are exempted from XBRL filings till further orders.

Filing Deadlines:

A filing deadline of 30th September, 2011, has been notified. However, where companies hold the Annual General Meeting in the month of September 2011, they would be required to file the information using XBRL within 30 days from the date of adoption in the General Meeting. Failure to adhere to the timeline may result in imposition of additional filing fees.

Meaning of XBRL:

XBRL stands for eXtensible Business Reporting Language. It is a computer language used for the electronic communication of business and financial data which is revolutionizing business reporting around the world.

Who developed XBRL:

XBRL is an open, royalty-free software specification developed through a process collaboration between accountants and technologists from all over the world. Together they formed XBRL International which comprises of almost 650 members including global companies, accounting professionals, technology professionals, government officials and financial services bodies.

Advantages of XBRL to companies:

  1. Increases the usability of financial statement information-
    Currently financial statements are prepared in XML, excel or HTML format which can be easily read but not easily processed or analysed in accordance with the user’s needs. E.g. The word ‘sales’ appears at many places in financial statements but if the reader wants to have all sales references and related information in one place, he would need to do so manually. Once the data is in XBRL format, this manual effort would not be required.
  2. Automates data collection-
    Data from different company divisions with different accounting systems can be assembled quickly, cheaply and efficiently.

How do companies create statements in XBRL:

  • XBRL compliant accounting software products are now available which will support data in XBRL form Statements can be mapped into XBRL using XBRL software tools designed for this purpose
  • Data from the accounting database can be extracted in XBRL format. It is not strictly necessary for an accounting software vendor to use XBRL. Third party products can also achieve the transformation of data to XBRL
  • Applications can transform data in particular formats into XBRL. The route which an individual company takes depends on its requirements and the accounting software and systems it currently uses among other factors.

Additional clarifications expected from MCA:

  • Mechanism for companies to ensure that such financial statements meet the MCA XBRL compliance and validation tests
  • Guidance whether the MCA will provide a portal to file financial statements in a predetermined XBRL compliant format so that companies can save cost and efforts in doing XBRL conversion themselves.

To put it simply, XBRL is a language for information. It accurately reflects data reported under different standards. It does not change the data. The MCA has set up a dedicated website on XBRL on its homepage www.xbrl.org.in, which provides useful information including a brief manual on filing. The MCA website is likely to post options for XBRL reporting by 15th of July 2011.

For further queries e-mail - manoj.gidwani@skpgroup.com