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The Ministry of Corporate Affairs (MCA) of the Government of India (GoI) has mandated certain class of companies to file their financial statements in XBRL format for the year ended Mar. 31 2011 onward, in XBRL format. The XBRL mandate was passed considering the enormity of data pertaining to over 8.5 lakh companies and other tedious procedures with respect to corporate filings and registration. However, with this new regulation in force, the concerned companies are faced with the challenge of converting their financial statements into XBRL for the purpose of filing returns. XBRL still being an emerging concept in India is likely to face hiccups in the initial adoption. Creating XBRL documents in a short notice, is indeed a difficult task and some of the challenges which companies need to address are understanding of XBRL and MCA mandate, training to the staff, impact on existing processes and cost, correctness of XBRL documents and so on. Following are some of the frequently asked questions (FAQs) on the mandate for XBRL filing :-

Which companies are required to file their financial information in XBRL format and from which financial year?

As per the MCA mandate, all companies listed in India, and their Indian subsidiaries or companies having a paid-up capital of Rs 5 crore or above or companies having turnover of Rs 100 crore or above are required to file their financial information in XBRL format for the financial year ended March 31, 2011 onward.

What all information is to be converted into XBRL format?

MCA has published on its micro site for XBRL ( ), the scope of information to be included in the XBRL instance document. The financial statements i.e. balance sheet, profit and loss and cash flow statements, and notes forming part of accounts, directors report, auditor's report, and some additional information like signatories to balance sheet, etc. is to be prepared in the XBRL format.

Can MCA's XBRL mandate be compared to 'Corpfiling' system of SEBI?

SEBI had implemented 'Corpfiling' system in the year 2008, which required 100 companies to file their quarterly data in XBRL format with the two exchanges - BSE and NSE. To facilitate filing of data in XBRL, a simplified solution was provided by SEBI. The MCA mandate covers a large spectrum of companies and also the information which is to be captured in XBRL format is quite large as compared to XBRL data submitted using Corpfiling platform. Companies need to create instance documents, and MCA would be providing validation services, which can be used for checking the instance document created.

Does preparing XBRL Documents mean that the entire annual report has to be typed (Data Entry) in XBRL?

XBRL software is required for creating instance documents. The working of every XBRL software, is different, but the output i.e. the XBRL instance document is same irrespective of the software used. As the process of every software is different, in some cases data entry is to be done, while some facilitate tagging on the document (i.e. the annual report in this case) itself.

How can the textual information like director's report be converted into XBRL, as is the case with numbers and figures in the financial statements?

An XBRL instance document can contain both numeric and non-numeric information. The MCA taxonomy has elements defined to capture textual information. For instance, the entire directors report can be tagged using the element 'DisclosureInBoardOfDirectorsReportExplanatory' . Similarly for other textual items, there are tags available in taxonomy.

Does filing for FY 2010-11 in XBRL format require conversion of previous year's ( FY: 2009-10 ) figures into XBRL?

According to MCA mandate, the annual report for year ended FY2011 (and onwards) in XBRL format. The annual report for FY 2011 would contain the data for year ended 2011 and also comparative figure for previous year as included in FY2011 annual report. Thus the XBRL instance document will contain the data for current year (i.e. 2011) and previous year (i.e. 2010).

Is it possible to have automatic XBRL filing with MCA via applications like SAP/IFS ?

Yes, ERP solutions can generate XBRL data provided the ERP systems have that functionality. Also, companies can also use intermediate applications which can connect to ERP and generate the XBRL output. One of IRIS' offering IRIS iDeal, is one such application which can connect to accounting systems and create XBRL documents once mapping with taxonomy is done.

What is the road map/phases for XBRL implementation? Please describe the steps for implementation to be followed by a company?

There are several approaches for implementation of XBRL. Companies can either go for complete integration with accounting systems or have bridge applications to connect to accounting systems or have a standalone tool which can work with the final data. Selection of the approach depends on the preparedness of company, technology state, efforts and time involved and impact on existing systems. Complete integration seems best in long run as most of the process of creating XBRL documents would be automated, however it requires considerable time and efforts. Bolt on (working with final data) approach has minimum impact on the existing accounting systems and better turnaround time. Companies can also consider outsourcing the conversion task to companies providing XBRL services.

What is the significance of the Final Taxonomy and the Business Rules prepared by the MCA, and how are they to be used respectively?

The XBRL Document Creation Process has 3 steps:

  • Mapping the company's financials to the taxonomy.
  • Creating instance document.
  • Validating and Submitting the Instance Document.

For creating XBRL data to submit to MCA, the final taxonomy as published by MCA would be used for the mapping of company's information. In addition to basic XBRL rules, MCA has also published list to rules for creating the XBRL document, which need to be followed for creating a valid XBRL document.

Will extension to the taxonomy be allowed based on company specific requirements?

According to the filing manual, no extensions are allowed. This implies if for the items reported by the company, no exact match is found in the taxonomy, the taxonomy cannot be extended to include the company specific element, but the most appropriate tag available in the taxonomy needs to be selected. From FY 2012, MCA plans to allow extensions.