KNOW ABOUT XBRL

KNOW ABOUT XBRL

WHAT IS XBRL?

XBRL stands for eXtensible Business Reporting Language. XBRL is a language for the electronic communication of business and financial data which is revolutionising business reporting around the world.

XBRL has been developed by XBRL International, a not-for-profit consortium of over 450 companies and organizations which is promoting its worldwide use. India is now an established jurisdiction of XBRL International. A separate company, under section 25 has been created, to manage the operations of XBRL India.


APPLICABILITY OF XBRL IN INDIA

The Ministry of Corporate Affairs, Government of India, vide its General Circular No. 37/2011, dated June 07, 2011 has required the following class of companies (except banking companies, insurance companies, power companies and the Non Banking Financial Companies) to file the financial statements in XBRL form only from the year 2010– 2011:
1. All companies listed in India and their Indian subsidiaries;
2. All companies having a paid up capital of Rs 5 crores and above; and
3. All companies having a turnover of Rs 100 crores and above


BENEFITS & USES

XBRL offers major benefits at all stages of business reporting and analysis:

• Automation and cost saving
• Faster, more reliable and more accurate handling of data,
• Improved analysis,better quality of information and decision-making.
• It is extensible, so companies and other organisations can adapt it to meet a variety of special requirements.
• The language is a flexible one which is intended to support all current aspects of reporting in different countries and industries.


THE WORKING OF XBRL

XBRL makes the data readable with the help of 2 documents:
- Taxonomy;
- Instance Document
XBRL Taxonomies are the dictionaries which the language uses. These are the categorisation schemes which define the specific tags for individual items of data (such as "net profit"). National jurisdictions have different accounting regulations, so each may have its own taxonomy of financial reporting.
For Example: The taxonomy contains the Element Name: Loans Advances which has the following characteristics:
Abstract: False
Data Type: Monetary
Substitution Group: Item
Balance Type: Debit
Period Type: Instant
The Label, Loans Advances, is defined as the total amount of loans and advances given by the entity to all parties and is represented by the sum of the following:
Secured Loans Advances,Unsecured Loans Advances,Advance Tax Paid,Deposit Assets,Tax Deducted At Source,Other Advance Taxes,Advance Tax paid

Instance Document
 A 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.
 It is a business report in an electronic format created according to the rules of the XBRL. It contains the facts that are defined by the elements in the taxonomy it refers to, together with their values and an explanation of the context in which they are placed.
 Instances documents must be linked to at least one taxonomy, which defines the contexts, labels or references.
Following is an extract of an instance document:


From the above example, we can infer the following information about the data given for Loans & Advances:
• Loans Advances amount= Rs. 92868202
• Currency: INR
• Balance: Debit
• Company: ABC Co. Ltd.


HOW TO CREATE FINANCIAL STATEMEMTS IN XBRL

Generation of XBRL formatted financial statements can be through the following modes:

a) Conversion: At the most basic level of adoption, an organization takes information from various sources within the organization and then copies or keys this information into an XBRL tool. There is no process change in thisapproach, merely a conversion of the results of the existing processes to a different format—including the existing inefficiencies.

b) Outsourced: A second alternative is to use a third-party service provider to generate the XBRL financial statements by interfacing with them with the financial reporting tool.


STEPS IN CREATION OF XBRL INSTANCE DOCUMENT

1. Obtain audited financial statements.

2. These audited financial statements would preferably be in Excel and/ or Word format.

3. Preparation of the source document based on the audited financial statement for XBRL conversion.

4. Mapping the source document to the Target Taxonomy as mandated by MCA.

5. Validating the mapped document to create instance document.

6. Eliminating errors arising out of validation based on error logs.

7. Approval of Instances and mapping by the Board of Directors before creating XBRL instance document.

8. Creating XBRL instance document.

9. Validation of the XBRL instance document by the management using the tool provided by the MCA before filing with the Office of the Registrar of Companies (ROC).

In the above procedure, Mapping or Tagging as per Step no. 4 is the most important step for the creation of an Instance Document because it requires exercise of reasonable judgement and accounting knowledge in mapping the financial statement items to the appropriate tags in the taxonomy.Judgement has to exercised having regard to the nature of the financial statement item/account head to ensure selection of the most appropriate tag.


It has to be ensured that the XBRL financial statements so generated are as per the taxonomy defined by MCA.This includes ensuring completeness, accuracy, mapping and structure of the
XBRL financial statements.

1. Completeness means that all required information is formatted at the required levels as defined by the entity’s reporting environment. Only permitted information selected by the entity is included in the eXtensible Business Reporting Language (XBRL) files.
2. Mapping means that the elements selected are consistent with the meaning of the associated concepts in the sourceinformation in accordance with the requirements of theentity’s reporting environment.
3. Accuracy means that 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.
4. Structure means that XBRL files are structured in accordance with the requirements of the entity’s reporting environment.

To avoid any misunderstandings at a later stage, it would be appropriate that terms of the engagement are formalised in an engagement letter. An illustrative engagement letter is given as per Annexure A. An illustrative management representation letter is given as per Appendix B.


STEPS TO BE FOLLOWED FOR E-FILING OF XBRL DOCUMENTS

5. Download MCA XBRL validation tool from MCA portal: Validating the instance document is a pre requisite before filing the balance sheet and profit & loss account on MCA portal.

6. Load the Instance Document in the validation tool: To load the instance document, you need to click the open button, select the instance document and open it. The detail of the company is available under the General Information tag in the XBRL viewer.

7. Use the tool to validate the instance document.
8. Perform pre-scrutiny of the validated instance document through the tool: For pre-scrutinizing the instance document, a working internet connection shall be required. In the Pre-scrutiny, the server side validations (i.e. validations which are to be validated from the MCA21 system) shall be performed.

9. Final verification post pre-scrutiny of the document: the next step is to generate pdf by using ‘Export to pdf’ functionality in the tool to verify the final instance document.

10. Attach instance document to the Form 23AC-XBRL and Form 23ACA-XBRL: First Form 23AC-XBRL and 23ACA-XBRL are to be filled up. Thereafter, the validated and pre-scrutinized instance document for Balance sheet is to be attached to Form 23AC-XBRL.Similarly, the instance document for Profit and Loss account is to be attached to Form 23ACA-XBRL. Separate instance documents need to be attached w.r.t. Standalone financial statements and consolidated financial statements.

11. Submitting the Form 23AC-XBRL and Form 23ACA-XBRL on the MCA portal: After the forms are filled, you are required to perform pre-scrutiny of the form, sign the form and then upload the same as per the normal e-Form filing process.

12. Viewing of balance sheet and profit and loss submitted in XBRL form on MCA portal: The XBRL instance documents submitted along with Form 23AC-XBRL and 23ACA-XBRL are in machine readable format. Therefore, for viewing the same in a human readable format, these shall be converted into human readable format by the MCA21 system.

Annexure A
Illustrative Engagement Letter
***
To the Board of Directors of …………. Company Limited
You have requested that we convert the audited financial statements of ………………… Company Limited, which comprise the Balance Sheet as at March 31, 20XX, and the Statement ofProfit & Loss, and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information to XBRL mode financial statements and also certify that these XBRL financial statements fairly present in all material respects, the audited financial statements of the company for the year ended March 31, 20XX, in accordance with the taxonomy specified by the Ministry of Corporate Affairs for filing of the financial statements in the XBRL mode. We are pleased to confirm our acceptance and our understanding of this certification engagement by means of this letter.
Our engagement will be conducted on the basis that the management acknowledges and understands that they have responsibility:
(a) For the preparation of XBRL financial statements in accordance with the taxonomy prescribed by the Ministry of Corporate Affairs. This includes:
• ensuring Completeness, Accuracy, Mapping and Structure of these XBRL financial statements.
• ensuring existence and operation of appropriate controls over the process of conversion of auditedfinancial statements to XBRL financial statements.
(b) To provide us with:
(i) Audited financial statements of ……………….Company Limited, viz.
• audited Balance Sheet of …………………….. Company Limited for the year ended March 31, 20XX;
• audited Profit and Loss Account of ………………… Company Limited for the year ended March 31, 20XX;
• audited Cash Flow Statement of………………… Company Limited for theyear ended March 31, 20XX; and
• audit report of ………………… Company Limited for the year ended March 31, 20XX.
(ii) Access, at all times, to all information, including the books, account, vouchers and other records and documentation, of the Company, whether kept at the head office of the company or elsewhere, of which [management] is aware that is relevant to the certification of XBRL mode financial statements;
(iii) Additional information that we may request from [management] for the purpose of the certification; and
(iv)Unrestricted access to persons within the entity from whom we determine it necessary to obtain evidence. This includes our entitlement to require from the officers of the Company such information and explanations as we may think necessary for the performance of the certification engagement.
We will conduct our certification in accordance with the Guidance Note on Certification of XBRL Financial Statements, issued by the Institute of Chartered Accountants of India (ICAI). As part of our engagement, we will request from [management and, where appropriate, those charged with governance], written confirmation concerning representations made to us in connection with the certification.
We look forward to full cooperation from your staff during our certification engagement.
[Insert other information, such as fee arrangements, billings7 and other specific terms, as appropriate.]
Our certification does not constitute an audit conducted in accordance with the Standards on Audit issued by the Institute of Chartered Accountants of India. Accordingly, we will not express an opinion on the truth and fairness of the XBRL financial statements. Accordingly, as a part of our engagement we will also not perform procedures to verify the completeness and accuracy of the information provided by the management or such procedures as would enable us to express an opinion on the effectiveness of the design, implementation and monitoring of controls by the management over the preparation of XBRL financial statements. We will, however, bring to your attention any material errors in these XBRL financial statements of which we become aware during our certification process.
Upon completion of our engagement, we will provide you with the XBRL mode a certification on XBRL financial statements referred to above. A draft of the certificate is attached for your reference. The form and content of our certificate may need to be amended in the light of our findings.
Please sign and return the attached copy of this letter to indicate your acknowledgement of, and agreement with, the arrangements for our certification of the XBRL financial statements including our respective responsibilities.
XYZ & Co.
Chartered Accountants
…………………………
(Signature)
Date : (Name of the Member)
Place : (Designation8)
Acknowledged on behalf of Company by
…………………………….
(Signature)
Name and Designation
Date








Annexure B
Illustrative Management Representation Letter
[Date]

M/s ……………………….
Chartered Accountants

We are providing this letter in connection with your engagement to convert the audited financial statements of …………………. (the “Company”) as of March 31, 20XX, and related financial statement schedules(s) to XBRL financial statements for being furnished by the Company to the Ministry of Corporate Affairs (“MCA”) vide their General Circular No. 43/2011 dated July 07, 2011 and also certification of aforementioned XBRL financial statements, prepared from the audited financial statements for the aforesaid period. The term “XBRL-tagged data” in this letter refers to the Company’s XBRL instance document, and the related taxonomy extension schema, label linkbase, calculation linkbase, presentation linkbase, and definition linkbase documents, all of which were provided to you on [specify date documents wereprovided or file names with date(s)].

We confirm that we are responsible for:
a. The XBRL-tagged data relating to above mentioned financial statements [and related financial statement schedule(s)]; the completeness, accuracy, and consistency of our XBRL-tagged data; and the related assertions;

b. Identifying the applicable XBRL-tagged data filing requirements, determining that the substance of the XBRLtagged data satisfies the regulatory requirements and filing the XBRL-tagged data in a form and manner that satisfies any regulatory or other requirements of the MCA to which the XBRL-tagged data is to be submitted;

c. The design, implementation, effectiveness, and monitoring of controls over the preparation and tagging of the Company’s financial statement data and over the submission of the XBRL-tagged data to the MCA;

d. Evaluating and monitoring the completeness, accuracy, and consistency of our XBRL-tagged data, including the work performed by any third parties in assisting us with the preparation of our XBRL-tagged data; and

e. Complying with all applicable laws and regulations.

We confirm, to the best of our knowledge and belief, the following representations made to you during your Assistance in XBRL filing engagement:

1. All known matters related to the XBRL-tagged data relating to our financial statements or the related assertions have been disclosed to you.

2. We have made available to you all:

a. Financial records and related data

b. Documentation relevant to the preparation of theXBRL files, such as [specify documents, e.g., information provided to a third party, tagging worksheets]

c. Output of all validation reports.

3. There have been no communications from regulatory agencies affecting the XBRL-tagged data relating to our financial statements referred to above [except for [insertappropriate description]].

4. We have no knowledge of any fraud or suspected fraud affecting the entity’s XBRL-tagged data.

5. We have no knowledge of any significant matters contrary to your findings [except for [insert appropriate description]].

6. [Insert any specific representations appropriate for this engagement].


_______________________________________
(Name of Chief Executive Officer and Title)


¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬______________________________________
(Name of Chief Financial Officer and Title)