Volume 4, Issue 5

30 May, 2012

Business Alert

XBRL in India

XBRL (eXtensible Business Reporting Language) has proved to be a revolution in financial reporting around the world. In this Newsletter, we provide a brief overview of XBRL and share some recent developments.

Overview of XBRL

XBRL is a computer language that enables information to become machine-readable. This happens by tagging source data to a common electronic dictionary known as a Taxonomy. For example, the profit and loss account items can be tagged to a Taxonomy issued by the MCA (Ministry of Corporate Affairs). Once tagged, the document can be machine-read and analysed, swiftly and accurately. Without XBRL, we all struggle to collate data from different sources like text documents, spreadsheets, pdf, etc. This is because information from such sources cannot be retrieved automatically; they need to be copy-pasted, linked through formulas, or re-typed.

XBRL is a quick-fix, low cost and accurate alternative to other means of gathering data like ERP, spreadsheet linkages, etc. It can be used to machine-read many documents. For example, financial statements, MIS reports, branch data, factory data, project information, regulatory filings, etc, can all be tagged to commonly designed taxonomies and made easily accessible. XBRL is thus useful for both external and internal reporting. Once a document becomes machine-readable, it can be analysed quickly and used in decision-making.

For a detailed understanding, please see www.xbrl.org.

Global adoption

Regulators around the world have spotted the benefits of XBRL and have made it mandatory to file documents in an XBRL mode. This enables regulators to automatically access filings and monitor companies. Examples include the US, UK, Netherlands, Canada, Singapore, etc.

XBRL in India

In 2011, the MCA made it mandatory for certain companies to file their financial statements and directors’ reports under XBRL. More companies may be required to do so for the year ended 31 March 2012. XBRL India has also released a draft revised taxonomy that has expanded the tagging requirements compared to the previous year.

Other regulators like the SEBI and the RBI are also making progress for their filing requirements.

For further information, please see www2.xbrl.org/in.

How we can help

XBRL conversion requires a good quality software tool, tagging and knowledge of financial statements, accounting and reporting. With access to good tools and our own experienced professionals, we can assist clients with the XBRL conversion process.

For further information on how we can help, please contact saumil.shah@skpgroup.com.

About SKP Group

SKP  Group   is a professional services group in India with offices in 4 cities and a client base from 40 countries. The group provides a wide range of services - assurance and risk management, tax and transfer pricing, cross border business advisory/ set-ups and transaction support, corporate services and business outsourcing solutions. You can find out more about us at www.skpgroup.com.