Firstly one needs to know why XBRL implementation is important in India. Is it only because of statutory requirement or our approach shall be what was the need for such statutory requirement to change the whole of reporting system in India.  Corporate perception has to change in this regard and it can only be done once the top management realizes the importance that what is achieved by following XBRL Taxonomy.

Main objective of XBRL is Transparency. Investor has put in its money in company and shall be aware of it’s IN and OUT. The XBRL is a way of electronic communication of business and financial data and is of immense utility to the capital markets and the investing community.

 XBRL involves huge initial conversion costs for companies but the long-term benefits for investors and the capital markets would be significant.

What is XBRL (eXtensible Business Reporting Language)

 XBRL is a digital ‘language’ that was developed to provide a common electronic format for business and financial reporting.  

  • Developed specifically to communicate information between businesses and other users of financial information such as analysts, investors and regulators 
  • Provides a common electronic format for business reporting

 It does not change what is being reported.  It only changes how it is reported.
It is self-contained document.

There are thousands of companies releasing financial results on quarterly, interim and on annual basis. There is no easy way to compare contents, but for XBRL.

Advantages of XBRL

  • Streamlined processes for collecting, comparing and reporting financial information
  • Reduced costs
  • Improved financial communication and transparency 
  • Increased data accuracy 
  • Direct comparability 
  • Multi languages and accounting standards support 
  • Improved risk management and control 
  • Ease of maintenance 
  • Faster, more reliable and extended scope of analysis capabilities for better decision-making

  

ICAI & XBRL

 ICAI has built up the Taxonomy which contains the concept; it does not contain any factual information reported by entity.

 Taxonomy has been based on three broad reporting categories. These are

  1. Commercial and Industrial
  2. Banking Companies
  3. Non-Banking Finance companies

The ICAI XBRL taxonomy has been constructed to conform to the current Indian Accounting Standards and Company Law.

XBRL AND IFRS

Transparency in the financial reporting is tremendously increasing around the world and two global standards have assisted to achieve these objectives i.e. IFRS and XBRL.

IFRS and XBRL are two different projects, a combined project implementation approach can enable greater efficiency and control over reporting.

To enhance transition to IFRS, consider how XBRL fits into your reporting processes as on date and start assessing how your current reporting processes may be affected by the adoption of IFRS.

Author:CA Shalini Tibe

Related posts:

  1. Challenges for implementation of IFRS
  2. IFRS:Why do we need IFRS in India?
  3. IFRS: an improvement in accounting quality as well as corporate governance