XBRL in India

CA Sandesh Mundra, [email protected]




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• What you understand from this Video ????


• Now see this Video…..



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Before XBRL

Financial Report -1

Financial Report -2

Financial Report -3

Financial Report -4

Financial Report -5

Regulators (Eg. ROC, SEBI, Stock

Exchanges)

Management

Bank & Fin. Institute

Foreign Regulators

Other Stakeholders

Different reporting format for different users


After XBRL

Financial Reporting

XBRL

Regulators (Eg. ROC, SEBI, Stock

Exchanges)

Management

Bank & Fin. Institute

Foreign Regulators

Other Stakeholders

Only single reporting format for all users


XBRL Smart Intro


XBRL History

1998 • April - Charles Hoffman, a CPA investigates how XML could be used for

electronic reporting of financial information.

• July - AICPA is Alerted Charlie Hoffman informs the AICPA High Tech Task Force about the potential of using XML in financial reporting.

• September - Product Description Crafted

• October - The AICPA decides to fund a project to create a prototype set of financial statements in XML.

• December - Prototype Completed The prototype is completed by Charlie Hoffman and Mark Jewett (Erutech). Jeffery Ricker (XML Solutions) contributes to the initial prototype.


What an Idea Sir Ji….

In 1997, XBRL began with the idea of a single individual - Charlie Hoffman, from a small CPA firm in Tacoma, Washington …


XBRL International•XBRL International is a not-for-profit consortium of approximately 650 companies and agencies worldwide working together to build the XBRL language and promote and support its adoption.

• 25 established Jurisdictions including India

• 4 Provisional Jurisdiction.


XBRL India Jurisdiction

• On Jan-2011 XBRL International admitted India as full member.

• XBRL India is a Company registered under Section 25 of Companies Act, 1956, incorporated for – managing the affairs of Indian Jurisdiction of

XBRL International.


XBRL India Jurisdiction Member– The Institute of Chartered Accountants in India – Associated Chambers of Commerce and Industry of India – Bombay Stock Exchange Ltd – Comptroller and Auditor General of India – Confereration of Indian Industries – i-flex Solutions Ltd – ICICI Bank Ltd – Infosys Technologies Ltd – Insurance Regulatory and Development Board (India) – Ministry for Corporate Affairs (India) – Ministry of Communication and Information Technology (India) – National Stock Exchange of India – Reserve Bank of India – Securities and Exchange Board of India – Tata Consulting Services – Vatas Infotech Pvt Ltd – Wipro Ltd


ICAI Initiatives on XBRL

XBRL Group

Regulators – SEBI, RBI, IRDA etc.

ICAI Council Members

Software Companies

Industry Associations

Relevant Ministries

Stock Exchanges


XBRL is….

• eXtensible Business Reporting Language• Open technology standard for reporting and

analyzing business and financial information.

• Computer readable language.• royalty free to use


XBRL is not…..

• standard chart of accounts• way of reporting of specific information• only for financial reporting• require us to report more information• too complicated to use or to understand• GAAP translator


How it Works

How XBRL works

The User View The Technology View


The User View

• XBRL is similar to use of bar codes• Similar to bar code, XBRL data can

automatically identify each data information, such as Value, type, currency, date, sources, etc.

• Instead of treating financial information as a static text…


The User View Cntd……

• XBRL tags are defined and maintained in taxonomies.

• Taxonomies are basis for tagging financial information in XBRL.


How User can use XBRL

• Requirements :– XBRL-enabled software and – XBRL-coded or "tagged” documents.

• A tag is a string of computer code that represents one concept

• Eg. All Companies having same terminology to identify “Total Assets”, Revenue, Cost of Goods, etc..


How User can use XBRL

• A collection of tags is called taxonomy.• Similar to a dictionary, it specifies the tags

(words) to be used, their meaning, their definitions (types of data, structure, and relation to each other) and the relevant rules and formula sets.

• data can be collect from many documents in different locations and reassembled into a document.


Technology View

• Above said simple process is made possible only by incorporation of various elements on a technology platform.

• Before understand any more in XBRL, You mush aware about:– XBRL Taxonomy– XBRL Tools


Benefit of XBRL

• Better Accuracy– As data need not be re-entered, the possibility of

error is reduced.

• Better Data management• Time Saving• Reusing Data• Data Validation• Easier document reading• Transparency


ICAI on XBRL

• ICAI launched XBRL India website on July 3-5, 2009 at International Conference , Agra

• ICAI has developed taxonomy based on Indian GAAP for:– Commercial and Industrial (C&I) taxonomy– Banking taxonomy– Taxonomy for Non-Banking Financial

Companies


Technical Terms in XBRL

• Taxonomy• Tag• Elements• Label • Instance Documents• Metadata• XBRL GL• Validation


Taxonomy• Collection of Tags• A type of dictionary for financial reporting.• These taxonomies define the specific tags for

individual line items of financial statement.• The taxonomy schema files together with the

relationships files define the concepts (elements) and relationships that form the basis of the taxonomy.

• Different core taxonomy exist for IN-GAAP, IFRS, US-GAAP, RBI, etc


Taxonomy document consists

• Schema file containing the definition of concepts used in the business report (.xsd file)

• XML file containing relationship between concepts (.xml file)– Definition– Presentation– Calculation– Labels– Resources


Tag

• Identifying information that describes a unit of data in an instance document and encloses it in angle brackets (<> and ). All facts in an instance document are enclosed by tags that identify the element of the fact.


Elements

• A human-readable description of a reporting concept.

• User point of view the definition is an unchangeable attribute of the element


Label

• Human-readable name for an element; each element has a standard label that corresponds to the element name, and is unique across the taxonomy.


Instance document

• XML file that contains business reporting information and represents a collection of financial facts and report-specific information using tags from one or more XBRL taxonomies.


Validation

• Process of checking that instance documents and taxonomies correctly meet the rules of the XBRL specification.


DEVELOPMENT OF XBRL TAXONOMIES

• General Purpose Financial Reporting XBRL taxonomy for Commercial and Industrial Companies C&I taxonomy

To begin, the XBRL India jurisdiction has developed the general purpose taxonomy

The draft general purpose taxonomy which was exposed for public comment, has been finalised on the basis of comments expected to be sent shortly to XBRL International for accreditation will be released for use in India.


DEVELOPMENT OF XBRL TAXONOMIES

• General Purpose Financial Reporting XBRL taxonomy for Commercial and Industrial Companies C&I taxonomy

To begin, the XBRL India jurisdiction has developed the general purpose taxonomy

The draft general purpose taxonomy which was exposed for public comment, has been finalised on the basis of comments expected to be sent shortly to XBRL International for accreditation will be released for use in India.




DEVELOPMENT OF XBRL TAXONOMIES (contd…)

Scope of C&I taxonomy

Financial statements-Balance Sheet, Statement of Profit and Loss & Cash Flow Statement Related non-financial information, e.g., disclosures required in notes to accounts, additional disclosures required under company law

Features of C&I taxonomy

Based on Indian Accounting Standards Conforms with requirements of Indian Company Law and SEBI Regulations Adopts architectural features of the IFRS general purpose taxonomy


Benefitted to Whom

• Companies• Investors• Regulators


Based on XML

• XML– XML is a standard language which is maintained by the World

Wide Web Consortium (W3C). – XML does not replace HTML– It enables rich, structured data to be delivered in a standard,

consistent way. – XML provides a framework for defining tags (i.e. taxonomy) and

the relationship between them (i.e. schema).

• XBRL– XBRL builds upon XML, – XBRL is also extensible in that users are able to create their own

XBRL taxonomies that define and describe tags unique to a given environment.


• How different is HTML –


• The motto of HTML is: "I know how it looks", whereas the motto of XML is: "I know what it means, and you tell me how it should look.”



Element Name

Prefix

Tag

Value / Datatype

Unit/ Currency


Advantages of XML• XML is not a limited set of tags defined by proprietary vendors.

• Rather than waiting for standards bodies to adopt tag set enhancements (a process which can take quite some time), or for browser companies to adopt each other's standards (yeah right!), with XML, you can create your own set of tags at your own pace.

• Of course, not only are you free to develop at your own pace, but you are free to develop tools that meet your needs exactly.

• XML allows each specific industry to develop its own tag sets to meet its unique needs without forcing everyone's browser to incorporate the functionality of zillions of tag sets, and without forcing the developers to settle for a generic tag set that is too generic to be useful.

• Machine-readable context information


XBRL and Financial Reporting


• To make this data interactive, the registrant will use software to affix an XBRL tag to each number on the balance sheet.

• For example, the tag affixed to the $100 “Cash” amount will have a descriptive name, such as “Cash.” Once the tag is affixed, any software capable of reading XBRL will be able to determine that the $100 amount represents cash, which is a current asset, and that the $100 amount rolls up into the “Total Current Assets” and “Total Assets” subtotals. The tag also provides a definition, the currency in which the amount is being reported (e.g., the U.S. dollar or the euro), and the related period for which the amount is being reported (e.g., as of December 31, 2008).



1st Step – Download taxonomy & Tagging Software

• Download taxonomy• Download XBRL Tagging Software


2nd Step – Tagging/Mapping • Open Excel file you wish to tag.


Mapping…..

• Mapping means:– Put XBRL taxonomies against Financial

Statements line items.

• Here is the Snap Shot of Mapped Financial Statement in Excel.


Financial Statements’ Line ItemsTaxonomies


3rd Step - Validation

• Process of checking that instance documents and taxonomies correctly meet the rules of the XBRL specification.


Steps to prepare XBRL based report1. Generating financial statement is what we are doing till

now.2. Mapping line items of financial statements with taxonomies.

3. After mapping, certain line items may remain unmapped.

4. For unmapped line items, new line items need to be added to the base taxonomy.

5. If new line items are calculated accounts, corresponding calculation logic needs to be added to the extended taxonomy .


Extended Taxonomy• Public taxonomies cannot always meet the precise needs of

every individual financial report.• For this reason, XBRL is designed to be extensible, allowing

preparers to create an extension taxonomy that adds to the public taxonomy.


Methods to create Extended Taxonomy

• Creating an extension taxonomy is done differently in different software products– Name of extension files should conform to standardfile name

conventions. – Contain the date of the end of the latest reporting period in the

filing.– The extension taxonomy has a unique namespace, which looks like

a web address although it is not. Eg. http://xbrl.ABC.com/2012‖.– Every element has a Universal Resource Identifier (URI) that

identifies the organization that maintains the element definitions, with an indication of what the term covers. In the XBRL US GAAP Taxonomy, namespaces start with http://xbrl.us/us-gaap/. A namespace prefix is not the namespace.


• Tags can be applied not only to amounts but also to nonmonetary financial concepts.

• The collection of XBRL tags forming the US GAAP Taxonomies has been modeled to accommodate all amounts and disclosures that must be reported under U.S. GAAP (i.e., if presentation of a financial number or disclosure is required under U.S. GAAP, a corresponding tag for that item most likely will exist in the taxonomies).


Tagging of notes


XBRL Software

(Sources: www.xbrl.org/tools )

http://www.xbrl.org/tools


RBI on XBRL

• RBI adopted XBRL for Online filing of return to standardize business reporting, especially financial reporting.

• At present OFRS is implemented for host return such as Section 42(2) Form – A , daily return Gap, Position and Balances (GPB) and . RCA

• RBI launched XBRL standard for Basel – II reporting system using XBRL through the existing Online Return Filing System (ORFS) on October 6, 2008.


SEBI on XBRL

• The SEBI has introduced Clause 52 in the equity listing agreement, requiring listed companies to file information with the exchange only through Corporate Filing and Dissemination System (CFDS). CFDS is the portal put in place jointly by BSE and NSE and offers a XBRL-enabled common platform for listed companies to file such information, statements and reports as may be specified by BSE and NSE



MCA on XBRL• MCA issued Circular no. 09/2011, dated 31-

3-2011:– Following companies are required to file their

balance sheet and profit and loss accounts in XBRL mode on or before 30-9-2011.• All companies listed in India and their subsidiaries

including overseas subsidiaries.• All companies having paid up capital of Rs. 5 Crore

and more or turnover of Rs. 100 Crore and more.


Current Situation in India

• Rules pending to be notified• No details of platform are available• Whether full balance sheet or only first page• Notes to accounts ?• Comments on draft !!!

– Options available


Singapore – http://www.bizfile.gov.sg/

http://www.bizfile.gov.sg/


• XML like Income Tax India• Manual tagging in Excel Sheet


XBRL - Mantra

Better Faster Cheper

Accuracy No rekeying Automated

Acceessibility Instant user access Software independent

Analysis More frequent updates Less effort to use

• XBRL mantra – “better, faster, cheaper”


Auditors’ roles in XBRL environment• Auditors’ role dose not change whether

financial statements in manual or electronic form.


Scopes for the professionals• The gradual adoption of XBRL as a medium of financial

reporting has received considerable support from regulatory authorities, internationally.

• As regulatory requirements take further shape in India, each Company will be faced with the following challenges.– To assess the XBRL reporting requirements – To identify XBRL tools best suited to its processes and environment– To identify appropriate XBRL taxonomies and explore the need for

extensions

• Developments for new taxonomies


Question

CA Sandesh MundraEmail: [email protected]: www.smaca.in

mailto:[email protected]

http://www.smaca.in/

XBRL in India

Technology

ca sandesh

usersca sandesh

general purpose

taxonomies

xbrl india

line items

financial

financial