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Is XBRL Necessary

Krishna Mohan (Chartered Accountant) (515 Points)

19 May 2011

I have attended a seminar on XBRL recently. After that seminar, i got a doubt whether insights into XBRL is necessary for practicing chartered accountants. XBRL is just a process of tagging each line item of financial statements which facilitates comparision of various companies performances. I think a software can be written by software people which coverts our existing traditional excel or word or some other human readable format into an xbrl format. It should be like generating xml for IT returns. This xml generation has been done by us with ease eventhough we don't know anything about xml. I don't understand why this type of hype or hulla bullah are being created. Anybody there to see my view point or logic? Please keep posted.

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18 Replies

Pravin Gupta CS (trainee) (789 Points)
Replied 20 May 2011

Originally posted by : Krishna Mohan
	I have attended a seminar on XBRL recently. After that seminar, i got a doubt whether insights into XBRL is necessary for practicing chartered accountants. XBRL is just a process of tagging each line item of financial statements which facilitates comparision of various companies performances. I think a software can be written by software people which coverts our existing traditional excel or word or some other human readable format into an xbrl format. It should be like generating xml for IT returns. This xml generation has been done by us with ease eventhough we don't know anything about xml. I don't understand why this type of hype or hulla bullah are being created. Anybody there to see my view point or logic? Please keep posted.

XBRL reporting by 15th of July

MCA website is likely to have options for XBRL reporting by 15th of July. Specific notification will be made to enable stakeholders for early filing. Circullar no. 09/2011 MCA specify following class of companies to file thier finencial statment in XBRL format:from the year 2010-11 upto 30th Sept. 2011

1. All Listed Companies and their Subsidiries

2. All Companies having a paid up capital of Rs. 5 crore or more or having Turnover of Rs. 100 Cr. or above...

Pravin Gupta CS (trainee) (789 Points)
Replied 20 May 2011

Originally posted by : Krishna Mohan
	I have attended a seminar on XBRL recently. After that seminar, i got a doubt whether insights into XBRL is necessary for practicing chartered accountants. XBRL is just a process of tagging each line item of financial statements which facilitates comparision of various companies performances. I think a software can be written by software people which coverts our existing traditional excel or word or some other human readable format into an xbrl format. It should be like generating xml for IT returns. This xml generation has been done by us with ease eventhough we don't know anything about xml. I don't understand why this type of hype or hulla bullah are being created. Anybody there to see my view point or logic? Please keep posted.

XBRL reporting by 15th of July

1. All Listed Companies and their Subsidiries

2. All Companies having a paid up capital of Rs. 5 crore or more or having Turnover of Rs. 100 Cr. or above...

Ramanreet Singh (CA-FINALIST) (421 Points)
Replied 20 May 2011

well i think xbrl does have many other uses as well...like real time reporting for banks etc. plus their being different taxonies for different standards i think the knowledge of ca's in making these softwares would be required. This is just my personal opinion.

1 Like

Milind Talegaonkar (Company Secretary) (41 Points)
Replied 30 May 2011

Dear Mr.Krishna Mohan, i fully agree with your observations and remarks. It is more of an IT issue and less of an issue for Commerce/Accounts professionals like us. The Taxonomy for XBRL was fianlised yesterday only. we now wait for the software vendors to announce their capability of being able to provide an interface where items keyed in by us are ultimately converted into XBRL format which is being insisted. Lets wait and see.

1 Like

UJWAL.D (CHARTERED ACCOUNTANT) (161 Points)
Replied 25 July 2011

Dear Krishna Mohan.

First Of all, i would like to inform you that conveting of financials into xbrl form can be done by software as you said and there is no need for CAs to sit and do it and till now so many vendors are into developing the software for the same

However the tag selected by the software cannot be said to be accurate as in xbrl tag selection should be based on the content of the line items being tagged. For examble company A and B have short term investments. But Company A has only trading securites but Company B has trading securites as well as held to maturity securities. Since line item given in BS is short term investments in both the cases , software will pick same tag for both the companies namely short term investments whereas for company A it should be trading securites and for company B it should be a tag covering both trading securites as well as held to maturity securities. Here is the role of CAs. He has to read and identify which is the most appropriate tag for each line item for each statements and for each company. this analysis and interpetation can be done effectively only by CAs and not the software.

Given below is some of the advantages of xbrl.

1.Financial statements can be converted into any languages within seconds.

2. Real content of each line item can be read ,interpreted and understood by clicking the tag being used for the concerned line item.

3.Since Financials are always condensed and/or consolidated time can be saved for users of financial information if all informations are available electronically as you dont have to go throgh the notes to accounts to understand real content as tag are selected to include all the required and given information.

Please note that this is only small insight about xbrl and there are so many other advantages as well.

To conlude as am working in xbrl process for last one and half year i can clearly say that XBRL is a big world and not easy as we think .

3 Like

Naveen Garg (CA ) (96 Points)
Replied 28 July 2011

Nicely answered by Ujwal.

Prasanta Kumar Ray (Sr. Executive) (22 Points)
Replied 20 August 2011

I completely agree with Mr Ujwal because XBRL is not that easy as it is looking. If the companies depends on the software only, then it become difficult for them to file their return within due time. Ujwal has given a simple example in Balance Sheet but there are vast areas specially in Notes to Accounts where CA's role is more omportant for tag selection in which detail analysis is required.Hence only those person can understand the difficulty of XBRL who are already in this process.

Rajagopalakrishnan R (PARTNER) (1417 Points)
Replied 26 August 2011

XBRL may have a number of uses. No doubt data can be transported between applications and needs seamlessly. However, the moot issues in XBRL reporting are:

1. If MCA wants to implement XBRL reporting, then it should provide a tool at the MCA 21 site for conversion of financial statements into XBRL. For eg like what the CBDT has done for e filing of IT returns. Let there be a million or more tags in this tool. All the possible line items can be built into this tool just like the ITR 1 to 6 utilities provided by in the Income Tax site. We can fill in data where it is relevant or present and ingore or leave blank the rest. Now forcing the users to shell out anywhere between Rs. 10000 and much bigger sums so as to enable e governance at the Government's end is discriminatory at the least and daylight robbery at worst.

2. A number of IT companies in thier avatar as service providers and solution providers have cropped up and are offering to convert the Financial statements into XBRL format. How can a company entrust its sensitive financial information to a service provider who has no antecedents. This should be a matter of choice to the companies and their auditors.

3. The compliance cost is slowly increasing especially at the MCA 21 site in the guise of e governance. No doubt MCA 21 has revolutionised corporate compliance filings in the last 5 years, but forcing XBRL on the companies that too without providing for a free or cheap tool for the same is playing into the hands of the likes of TCS etc.etc.

4. I am sure all companies would comply with the XBRL requirement if a free tool is provided in the MCA site. Just follow the example at the Income tax site where this year the number of non mandatory e filings are set to overtake the manual filings. This is mainly on account of the tax payer friendly approach the department has taken. many of us are using the free tools while many others are using vendor specific software for e filings. This is a matter of choice. and rightly so.

I hope MCA wakes up to this aspect and recoginses the draconian nature of foisting this costly XBRL experiment on the Indian Corporates

UJWAL.D (CHARTERED ACCOUNTANT) (161 Points)
Replied 30 August 2011

Dear Gopalakrishnan R,

I would like to share some clarification for the concerns you have raised.

1.About the tool and conversion cost

a)The cost of tool and conversion charge are much cheaper in india when compared to cost in other countries which have adopted XBRL especially in US .Companies.US companies spend $30,000 to $2,00,000 yearly to comply with XBRL filing requirement.

b) Companies in india for which xbrl is applicable for this year would be spending lakhs of rupees for auditing etc ,which is also for compliance of regulation only.No one is concerned about these costs but concerned about xbrl cost(normally only in thousands of rupees and not in lakks of rupees) which is hard to understand.

c) If a company having minimum 100 crore turnover cannot afford the xbrl cost, then i have no words for them

d) MCA is not recommending anyone to go for outsourcing, then can buy or develop a software in house.

2.About Confidentiality

The companies have to give their annual report only to the the vendors for converting into XBRL and for listed companies annual report is published data. I believe just like CAs ,CSs maintain confidentiality ,it is important to maintain confidentiality by these vendors as well and definitely all vendors will be having confidentiality clause in their conversion service agreement ,if not companies should demand for the same.

3 About the easiness of tagging

a)XBRL is not like income tax filing. in income tax returns all heads and calculations are fixed and will not change from company to company or person to person. But in XBRL it is not possible to predefine each reporting heads for all companies and this is the challenge in XBRL.

b)Even if MCA provide free software it will be difficult to do XBRL by all the people since it require subject knowledge, technical knowledge, judgment skill, accuracy etc to get the quality xbrl report.

Thanks

1 Like

Prasanta Kumar Ray (Sr. Executive) (22 Points)
Replied 30 August 2011

Fantastically Reserched and answered by Ujwal.D

Avinash (Consultant) (21 Points)
Replied 31 August 2011

Dear All,

I have been following this thread regarding Is XBRL necessary. There is a blog "Introduction to XBRL":

You can go through it once:

https://vibranttech.wordpress.com/

Regards

Avinash Kapoor

(Guest)

Originally posted by : Krishna Mohan
	I have attended a seminar on XBRL recently. After that seminar, i got a doubt whether insights into XBRL is necessary for practicing chartered accountants. XBRL is just a process of tagging each line item of financial statements which facilitates comparision of various companies performances. I think a software can be written by software people which coverts our existing traditional excel or word or some other human readable format into an xbrl format. It should be like generating xml for IT returns. This xml generation has been done by us with ease eventhough we don't know anything about xml. I don't understand why this type of hype or hulla bullah are being created. Anybody there to see my view point or logic? Please keep posted.

The idea behind XBRL is simple. Instead of treating financial information as static text – as in a standard internet page or a printed document – XBRL provides an identifying tag for each individual item of data, whether numeric or textual. This tag is computer readable and allows the information to be used interactively.

MCA Taxonomy and XBRL Instance Document

MCA has provided the Taxonomy which forms the basis for tagging financial and business information in XBRL. This Taxonomy is an electronic classification system of tags defining thousands of business reporting concepts (including Text) and their relationships.

XBRL Instance Document is the end result of how a preparer creates XBRL data. It contains report information typically complied from internal ERP or Financial reporting systems that have been marked up or tagged in XBRL.

eXBace is a One Stop Complete XBRL Software - On Document editing/Tagging, Quick Viewing, Advance Validating and Finally extensible reporting.

Now XBRL Software is available in affordable price, follow this link:

https://www.mca.gov.in/XBRL/pdf/KDK_Softwares_%28I%29_Pvt_Ltd.pdf