eXtensible Business Reporting Language
XBRL stands for Extensible Business Reporting Language. It is a new global standard of Financial and Business Reporting with an Open Technology. It is used for electronic sharing and communication of business and financial data. It facilitates preparation, analysis and communication of business information. It offers significant cost savings, greater efficiency, accuracy and reliability in use of financial data.
XBRL and XML
The concept of XBRL is developed and derived from XML (eXtensible Markup Language) by international non-profit consortium of companies, organizations and government agencies. XBRL is a flexible version of XML. It provides a standard set of XML tags for exchanging accounting information and financial statements between companies and analysts. It is free of license fees.
XBRL consists of core language of XML elements and attributes. It allows and helps software vendors and programmers to adopt this language for preparation and distribution process. It also helps to enhance, exchange and comparison of business reporting information. The scope of XBRL extends to financial statements, financial information, non financial information, general ledger transaction and regulatory findings, such as annual and quarterly reports.
XBRL with Computers
The computes recognize the data in XBRL document, select it, analyze 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 information.
XBRL in Organizations
All types of organizations can use XBRL. As XBRL is extensible and flexible, it can be adapted to fulfill different requirements. By using XBRL, company and other producers of financial data and business reports can automate the processes of data collection.
Companies can use XBRL to save costs and simplifies their processes for collecting and reporting financial information. XBRL can handle data in different languages and accounting standards. It can flexibly be adapted to meet different requirements and uses. Data can be transformed into XBRL by suitable mapping tools or it can be generated in XBRL by appropriate software.
In XBRL information is broken down into unique items of data. These data items are then assigned mark-up tags that make them computer-readable. For example, the tag <Liabilities>100</Liabilities> enables a computer to understand that the item is liabilities, and it has a value of 100.
As XBRL tags are formed in a universally-accepted way, they can be read and processed by any computer that has XBRL software. XBRL tags are defined and organized using categorization schemes called taxonomies.XBRL doesnot treat financial information as a block of text or numeric items, instead it attaches a unique electronically readable tag for each individual financial term.
Different countries use different accounting standards. Reporting under each standard reflects differing definitions. The XBRL language uses different dictionaries, known as ‘taxonomies’, to define the specific tags used for each standard. Taxonomies are the computer-readable ‘dictionaries’ of XBRL. The taxonomies provide definitions for XBRL tags, they provide information about the tags, and they organize the tags so that they have a meaningful structure.
Taxonomy is made up schema and linkbases. Schema is the set of all the concepts with their XBRL attributes and documentation. All the attributes that required for the XBRL software to understand the meaning of a concept have to be defined. The linkbases provide the relationship amongst the various concepts. While building the taxonomy three broad reporting categories have been considered, taking into account the different reporting requirements. These are:-
1. Commercial and Industrial
2. Banking Companies
3. Non-Banking Finance companies
Ways to create Financial Statements In XBRL
- XBRL-aware accounting software products are becoming available which will support the export of data in XBRL form. These tools allow users to map charts of accounts and other structures to XBRL tags.
- Statements can be mapped into XBRL using XBRL software tools designed for this purpose
- Data from accounting databases can be extracted in XBRL format. It is not strictly necessary for an accounting software vendor to use XBRL; third party products can achieve the transformation of the data to XBRL.
- Applications can transform data in particular formats into XBRL. The route which an individual company may take will depend on its requirements and the accounting software and systems it currently uses, among other factors.
Banks Submitting Returns to RBI in XBRL
A set of returns for monitoring capital adequacy and other statutory returns have been implemented using XBRL under RBI Act 1934. Rationalises the number of returns to be submitted by banks, thus reduces reporting burden on banks.With the introduction of XBRL, RBI could bring down number of returns from 291 to 225(vide RBI Press Release dated 14 August 2008 and 17 December 2008.)
Benefit to a company
- Increases the utility of financial statement information.
- The need to re-key financial data for analytical and other purposes can be eliminated.
- Companies can automate data collection.
- Reports can be produced with minimum efforts.
- Removes time-consumption, error-prone processes as well as performs accuracy checks on software.
XBRL in MCA
Circular No. 09/2011.It has been decided by the Ministry of Corporate Affairs to mandate certain class of companies to file balance sheets and profit and loss account for the year 2010-11 onwards by using XBRL taxonomy. The Financial Statements required to be filed in XBRL format would be based upon the Taxonomy on XBRL developed for the existing Schedule VI, as per the existing, (non converged) Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006.
Income tax Department accepts Income Tax Returns in xml format. The data submitted in pdf formats is capable of getting exported to xml.
According to General Circular No. 37/2011 dt. 7-6-2011 XBRL filing is mandatory in a phased manner based on existing Schedule VI. For the companies having balance sheet date on or after 31/03/2011 the last date of filing will be 30th November or 60 days from the date whichever is later.
Coverage in Phase I
The following class of companies has to file the Financial Statements in XBRL Form only from the year 2010-2011:-
(i)All companies listed in India and their subsidiaries, including overseas subsidiaries;
(ii)All companies having a paid up capital of Rs. 5 Crore and above or a Turnover of Rs. 100 crore or above.
- Unlisted Companies
- Overseas Subsidiaries of Listed Companies
- Power Companies
- Insurance Companies
XBRL is set to become the standard way of recording, storing and transmitting business financial information. It is capable of use throughout the world, whatever the language of the country concerned, for a wide variety of business purposes. It will deliver major cost savings and gains in efficiency, improving processes in companies, governments and other organizations.
With this XBRL Mandate, analysis of the use of the taxonomies and ability to easily modify them will become critical in evolving the reporting regulations. Companies and finance professionals would need to submit financial data on XBRL format to MCA and MCA would need to verify the data to ensure compliance with structural and reporting guidelines and analyze them quickly and reliably to ensure quality, accuracy and consistency.
Author: Sweta Agarwal
Contact: +91 9883116576, +91 9339906677
Date: 06 July 2011