22 September, 2011

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How to E-file an XBRL Return - Step by Step Analysis

Introduction to XBRL

XBRL(Extensible Business Reporting Language) is another advanced reporting languageof the XML family. XBRL ensures that the figures reported to governmentauthorities and other organisation does not remain dormant piece of printedpapers but these figures can be used in data analysis.

ICAI tookinitiative in 2001 for implementation of XBRL as a first step towards Digitaldata Reporting. Knowing the fact that it would take some time before it gets approvalfrom the ministry. It took 10 yrs for the ministry of corporate affairs torelease mandate for filing of annual accounts in XBRL format.

Though thisfact must be iterated that the Reserve bank of India has already started  this reporting method for the Indian banksreporting , but nonetheless it was at very miniscule level.

What is MCA Mandate?
The  companies whose  Balance Sheet  date  is 31.03.2011  or  onwards, need  to  file their  financial statements inXBRL provided they qualify the criteria laid as per Ministry’s general Circular37/2011 dated  07.06.2011.The  following class  of  companies have  to  file the  Financial  Statements in  XBRL Form from the year2010-2011:-

  • All  companies listed  in  India and  their  subsidiaries (Subsidiary  of  listed company  are required to file inXBRL format, irrespective of its paid up capital)
(Note : If A ltd is Listed Company ,B (P) Ltd is A’s Subsidiary and C (P) Ltd is B’s Subsidiary , then as per FAQby MCA all three i.e. A Ltd , B (P) Ltd & C (P) Ltd have to file in XBRLFormat only)
  • Allcompanies having a paid up capital of Rs. 5 Crore and above or a Turnover of Rs100 crores or above. I.e. about 28,000 companies have to file in XBRL format.
There shallbe a separate set of Form 23AC (Form for filing Balance Sheet and other documents with the Registrar)  and Form  23ACA  (Form for  filing  Profit &  Loss  Account and  other  documents with  Registrar) available on theMCA portal for filing in XBRL form. Existing Form 23AC and 23ACA shall continueto be there for filing by companies to which XBRL filing is not applicable; andfor filing of earlier year’s documents.

Theoretical Aspects of XBRL – To beknown before Filing

XBRL can bebroadly understood in two separate aspects
·        Taxonomy
·        InstanceDocument

Taxonomy : In Simplest of words possible , Ican define taxonomy as dictionary of accounting elements. This taxonomy isideal set of elements available with the ministry against which the data of thefiler has to be tagged. Revised Taxonomyas released by MCA contains precisely 3,174 elements.

Taggingmechanism will be a process in which the data on physical financial documentswill be converted as per available taxonomy. For the purpose of this tagging,XBRL softwares are available in the market . Details can also be obtained fromXBRL portal of MCA.

(Note : Taxonomy as released by MCAas of today is compliant with Indian AS and Existing Schedule VI to CompaniesAct , 1956 . As and when IND – AS and Revised Schedule VI comes applicable ,the same will be revised and hosted on MCA Portal )

Instance Document: Once the tagging process is complete, the document that will be generated will be a 
machine readable XBRL document, this document is called as Instance Document.

MCA Taxonomy

MCA Taxonomycontains majorly the following Parts :
  • Elementsand their characteristics like the nature of field (text, numeric etc ) , thenature of their balances, period type etc . In totality there are 3,174elements.
  • ExtendedLink Base – Extended link base are further groupings of elements and are in totality57 in number.
  • PresentationLink Base – Detailing of Extended Link Base.
  • Calculations
  • Labels 
Mapping Process – A Lucid step byStep process

Step 1
Map or tagthe company’s financial statements to the published taxonomy. This can be doneby following methods.
  • Certain  ERP systems may have inbuilt feature to tagthe financials to the published taxonomy of MCA
  • XBRLSoftwares.

Detailedlist of software vendors can be obtained from http://www.mca.gov.in/XBRL.

It must benoted that MCA does not recommends/associates with these vendors. It has beenhosted just for public Convenience.

This is byfar the most important and technical step of the process and nearly constitutes70 – 80 % of filing process. The Correctness of this mapping must be reviewed.Errors that creep in must be removed by professional judgement.

Step 2
Based on theMapping above , create a instance document.
SeparateInstance document must be created for :
  • StandaloneBalance sheet
  • Standaloneprofit and loss account
  • ConsolidatedBalance sheet
  • ConsolidatedProfit and Loss Account

Step 3
Validate thecreated instance document.

TheValidation tool of MCA will be shortly available on the MCA portal. This toolis to be downloaded.
Just as FVUvalidation or others, the instance document created should be validated fromthis validation tool.

Checksperformed by this validation tool are as below :
·        1) Correctversion of taxonomy used ?
·        2) Taxonomyelements fully recuperated ?
·        3) Compliancewith Business Rules ?
·        4) Visa Vis MCA – 21 Database ?
A Secure keylock will be put on Instance Document once the Validation is done correctly.

Step 4
File theInstance Document.
Instancedocument created and validated as above shall be attached to Form 23AC and Form23ACA ( Seperate class of XBRL forms will be hosted by MCA for XBRL purpose.)

Instance Document is not required tobe digitally signed. Only E-form 23AC and 23ACA are required to be digitally signedby practicing professional.
For anyother Query/ Opinion:

Next Article on XBRL shall include a review of several XBRL softwares in the Market and we will try to analyse their features and Cost Effectiveness to the Users.

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