Ministry of Corporate Affairs introduced the concept of XBRL filing of financial statements to ROC by mandating certain class of companies to file balance sheets and profit and loss account for the year 2010-11 onwards by using XBRL taxonomy.
XBRL is used for presentation of data which permits easy analysis and interpretation thereby reducing cost, time and effort.
MCA’s XBRL Circular
Ministry has mandated compulsory filing of Financial Statements (Balance Sheet, Profit & Loss Account, Director’s Report, etc) filling in XBRL format for:
- All Listed Companies and their Indian Subsidiaries
- All companies having paid up capital of Rs. 5 crore and above
- All companies having turnover of Rs. 100 crore and above
- All companies who were required to file their financial statements for FY 2010-11, using XBRL mode
Power Companies, Non Banking Finance Companies Insurance Companies and Banking Companies are presently exempted from XBRL filing.
- Practicing CA/CS/CWA to certify integrity of Balance Sheet, Profit & Loss filed in XBRL format.
- Tagged Financial Statements “fairly represents, in all material aspects, audited financial statements of the Company”.
MCA’s concern on quality of XBRL filing
- The Ministry has expressed its serious concerns on the quality of XBRL filings made during 2010-11 vide its Circular No. 33/2012 dated 16th October addressed to the President of the ICAI.
- The e forms were duly certified by CA/CS/CWA Professionals for their completeness and correctness in representation with respect to audited financial statement of the company.
- A random scrutiny of XBRL filing of financial statements of companies by MCA revealed significant variations. It has been observed by MCA that such variations are the consequences of general errors in XBRL filing i.e., not providing and incorrect mapping/tagging the following information in XBRL Financial statements.
- Few examples
- Cash Flow Statements not tagged
- Different presentation in Annual reports and XBRL filing
- Footnotes not tagged
- Incorrect usage of footnotes
- Information of all related party transactions
- Information of all subsidiary information not tagged
- Thus, such filing are erroneous and do not adequately represent true and fair view of the state of affairs of the company as per section 211 of the companies Act, 1956, And therefore it affects the decisions of the end users of financial statements.
As per MCA they have conducted more than 500 training program’s last year and it is very clear from beginning that Related Party, Cash Flow and Subsidiary etc were need to be tagged in detail. But many of the professional friend have taken this thing very light that being first year no negative action is expected from MCA. This was the major excuse instead of training.
In current year also detail tagging is required at all places. MCA is very clear from 1st day that “Validated document doesn’t mean Perfect Instance”. Validation is just a criteria there are lots of checks needs to performed by the companies and professional. Thats the reason for quality output becomes lengthy process. Otherwise generation of validated instance document is not a tough job. Critical thing is quality.
Changes in XBRL taxonomy for year 2012
- Though the coverage of the companies under XBRL ambit has not increased, the taxonomy has undergone a sea change owing to the change in the format of presentation of financial statements and the new taxonomy architecture.
- The new Taxonomy for the C&I companies has been developed as per the requirements of
- Revised Schedule VI to the Companies Act, 1956
- The existing notified Accounting Standards and Guidance Notes.
- SEBI Listing requirements
- Also included MCA specific regulatory elements and a few common reporting elements (to the extent they are not contrary to the Accounting Standards and the Guidance Notes).
- Keeping pace with the technological development, the architecture of the new C&I taxonomy has also been changed from IFRS 2006 to IFRS 2011. This Taxonomy has been released by the MCA.
The C&I Taxonomy 2012 is different from the 2011 Taxonomy owing to the following:
- The C&I Taxonomy 2012 is based on the requirements of Revised Schedule VI to the Companies Act, 1956.
- The architecture of the taxonomy has undergone a change. It has been developed as per the latest architecture viz. IFRS architecture 2011, whereas the earlier taxonomy was based in IFRS architecture 2006.
- The concept of ‘dimensions’ has been introduced in the taxonomy as against ‘tuples’. Dimensional concept was not supported by earlier architecture.
Steps for filing Financial Statements in XBRL mode
- Creation of XBRL instance document
- Launch Validation tool and load the instance document
- Validate & Pre-scrutiny the instance document
- Convert to pdf and verify the contents of the instance document.
- (This step is essential to ensure that the textual information entered in the instance document is clearly viewable)
- Attach instance document to the Form 23AC-XBRL and Form 23ACA-XBRL
- Submitting the Form 23AC-XBRL and Form 23ACAXBRL on the MCA portal
The critical areas to be looked into
- Creation of XBRL documents
- Validating the instance document generated
Preparatory work for XBRL
- Obtain audited financial statements of the company (standalone and consolidated)
- These audited financial statements would preferably be in Excel and/ or Word format.
- Mapping the source document to the Target Taxonomy as mandated by MCA
- Ensure the completeness, accuracy, mapping and structure of the XBRL financial statements so generated
- Completeness – all required information is included in XBRL
- Mapping- the elements selected are consistent with the meaning of the associated concepts in the source information
- Accuracy – the amounts, dates, other attributes (for example, Monetary units), and relationships (order and calculations) in the instance document and related files are consistent with the source information in accordance with the requirements of the entity’s reporting environment
- XBRL filing is not about only balance sheet and profit & loss. Each notes forming part of the taxonomy has to be looked into
- Balance Sheet and Profit & Loss Account
- Cash Flow Statements
- Notes forming part of the accounts
- Director’s report
- Auditor’s report
- Working papers
- Shareholders details
- CIN/PAN of the shareholders with more than 5% shareholding
- No of shares held
- Percentage of shareholding
- Details of Application money received for allotment of securities and due for refund and interest accrued thereon
- Details on private placements(if any)
- Details of public offerings made during the year(if any) – This is mandatory field
- Nature of security in case of secured borrowings
- Terms of repayment of long term borrowings
- Details on defaults on borrowings(if any) – date of default, outstanding amount of default towards principal and interest
- Details of bonds or debentures – Nature, particulars of redemption, no of allottees etc
- Disclosure of additional information
- Depreciation method for each class of asset
- Useful life or depreciation rates
- Description for using higher rates of depreciation than prescribed rates
- Details on revaluation of fixed assets
Related party details
- Name of related party, CIN or PAN, country of incorporation or residence
- Description of nature of related party
- Related party transactions in detail
- Transaction relating to key management personnel
- Outstanding balances for related party details
- Name of Subsidiary, CIN or PAN, country of incorporation or residence
- SRN of Balance sheet of Subsidiary
- Date of becoming subsidiary and Date of ceasing to be subsidiary(if any)
- Key information about subsidiary – Share capital, reserves, Revenue, Total profit etc
- Details of guarantee given for loans borrowed by subsidiary – Name of guaranteed party, CIN, amount
- Details of guarantee by subsidiary for loans borrowed by company– Name of guaranteed party, CIN, amount
- Directors information – Name, DIN, Designation, Qualification, Date fo Birth, Share held, Remuneration paid with break up
- Directors qualification(s), reservation(s) or adverse remark(s) of the auditors as per Board’s report
- Complete Directors report
Details of principal products or services
- Description of products or services category (with ITC code)
- Turnover of each products or services category
- Highest turnover contributing product or service(with ITC code)
- Unit of measurement, Quantity, Turnover of highest turnover contributing product or service
Scope and level of tagging
- The scope and level of tagging for preparation of financial statements in XBRL format shall be governed by the annual accounts and related documents of the company along with the business rules as published by MCA.
- Detailed tagging should be done for the various elements in the taxonomy. E.g.: Notes – Share Capital
- Details of Authorized Capital, Issued, Subscribed, Called up, Paid up
- Reconciliation of number of shares and value of shares outstanding
- Shares in company held by holding company or ultimate holding company or by its subsidiaries or associates
- Shareholders details
- In case of textual information like director’s report, notes to accounts etc., text block tagging may be used subject to compliance of business rules, if any, in respect of the same.
Modelling via Axis
The C&I taxonomy makes use of both ‘explicit’ and ‘typed’ dimensions.
- Modelling through ‘Explicit’ dimensions: Explicit dimensions are used in those cases where the number of domain members are known and can be defined. Examples are below:
- Notes – Share Capital
- Notes – Reserves and Surplus
- Notes – Borrowings
- Notes – Tangible Assets
- Notes – Intangible Assets
- Modelling through ‘Typed’ dimensions: Typed dimensions are used in those cases where the number of domain members is known but it is so large that it would be impractical to list all of them.Examples are below:
- Disclosure – Directors report
- Disclosures – Auditors Report
- Notes – Non Current Investments
- Notes – Current Investments
- Notes – Related Party
- Notes – Subsidiary Information
- Disclosure of Principal products or services
In the Indian context, As per Companies Act, 1956, for a private company there is no limit on maximum number of directors that can be appointed (as per Section 259) and for public companies, maximum twelve (Section 259 states that number of directors can be increased beyond twelve by permission of central government). Since the number of directors for companies does not have an upper limit so ‘typed’ dimension is used here and the preparer can create any number of members as per their reporting entity’s requirement.
Common mistakes found
- Mandatory fields missing
- Details of cost audit records
- Whether money raised from public offering during the year
- Breakup of equity capital
- Whether company is subsidiary company
- Conditional mandatory cases
- If there are any Non-current investments/Current investments, then “Aggregate amount of quoted investments” and “Aggregate amount of unquoted investments” is mandatory
- In Notes – Share capital, for “whether there are any shareholders holding more than five per cent shares in company” is selected as “Yes”, but no details are found.
- In details of principal products or services, ITC codes should be as per the ‘ITC HS Codes’ and ‘NPSC Codes’ given by MCA
- If values entered for current year then values have to be entered for previous year as well
- Duplication of axis entries
- Notes setting – for applicability of particular notes to an instance document
- For the ‘Revenue from products and service’, details of ‘Domestic turnover’ and ‘Export turnover’ should be given
- On importing certain details from previous year like directors details, related party details etc, only the details will be imported but the axis will be blank (since axis concept was not there in PY). As a result details will be present without the Axis which will give validation errors
- In “Notes Share capital” if there is only one type of equity share capital exists, then in “Disclosure of shareholding more than five per cent in company(Table)”
Class of share capital [Axis] Equity share 1[Member] Equity share 1[Member]
Name of shareholder [Axis] Shareholder 1[Member] Shareholder 2[Member]
- Directors repot – Even after attaching the director’s report, it is mandatory to give
- details of energy conservation
- foreign earning and outgo
- particulars of employee as per section 217
- directors responsibility statement
- Disclosure of accounting policies – Accounting policies used for preparation of financial statements and any significant changes is a mandatory field. Apart from them reason for changes in accounting policy and effect of such change in financial statements should also be mentioned
- At least three directors details in case of Public company
- DIN should be 8 digits and name should be based on DIN
- In case the company is a subsidiary company, then ‘Shares held by holding company or ultimate holding company’ has to be given in ‘Notes – Share Capital’
- Notes – Segments – If company has segments, then details of primary and secondary reportable segments assets/ liabilities and segment results details have to be given.
- Mandatory attachments
- Notes –Revenue (in case of Standalone)
- Notes – Employee benefits (in case of Standalone)
- Notes – Accounting policies