XBRL 2012-13

Many companies have filed in XBRL for this year as there is no change for this year's XBRL mandate of the Ministry of Corporate Affairs

Understanding XBRL

With the issue of General Circular No. 16/2012 dated July 6, 2012, the Ministry of Corporate Affairs (MCA) has kick-started the second phase of XBRL Implementation wherein it has marginally increased the scope including those companies also who were required to file their financials in XBRL format last year. It implies that companies who had filed in XBRL voluntarily last year, they are not covered under the mandate of XBRL this year as well. After the successful completion of first phase of XBRL Implementation last year, the MCA has also covered Cost Audit Report and Cost Compliance Report into the ambit of XBRL filings from this year vide General Circular No. 18/2012 dated July 26, 2012.

eXtensible Business Reporting Language (XBRL) is, now, not a new concept. We all are aware that instead of treating financial information as a block of text, XBRL provides a computer-readable tag to identify each individual item of data. By attaching identifying tags to individual pieces of data, a business reporting document becomes “intelligent” data, allowing the exchange of business reporting data by encoding the information in a meaningful way. For assigning an appropriate “tag” to the data, taxonomy (dictionary of all financial and non-financial reporting requirements) was required.

Background

ICAI recognising the importance of XBRL internationally, in 2007, had constituted a Group for promotion and development of XBRL in India. The Group comprised of the representatives of Securities and Exchange Board of India (SEBI), Ministry of Corporate Affairs (MCA), Reserve Bank of India (RBI), Insurance Regulatory and Development Authority (IRDA), National Stock Exchange, Bombay Stock Exchange and Infosys. In December 2008, initiated by the Institute of Chartered Accountants of India (ICAI), the Indian XBRL Jurisdiction, i.e., XBRL India of XBRL International (XII) has been constituted. The jurisdiction was provisional (non-voting) in nature for a period of 2 years i.e. upto December 2010 after which it became an established jurisdiction.

While XBRL is being adopted by other regulators in India, the Ministry of Corporate Affairs has taken a lead in its implementation by extending the mandate of XBRL filings to around 30,000 companies in its first year of XBRL Implementation and discontinuing the pdf filings for those companies. Banking Companies, Power Companies and NBFCs were exempt from XBRL filing owing to non-availability of taxonomies specific to their reporting requirements.

C&I Taxonomy

With the change in the presentation format of Financial Statements under the Companies Act, 1956 viz. Revised Schedule VI, The taxonomy was also required to undergo a change to be aligned with the new presentation format. In view of the taxonomy being prepared afresh, architecture of the taxonomy was also considered for a change to the latest IFRS Taxonomy Architecture 2011 as against earlier architecture viz. IFRS Taxonomy Architecture 2006.

The C&I Taxonomy had been prepared as per the requirements of the Revised Schedule VI to the Companies Act, 1956 and disclosure requirements under the Accounting Standards and Guidance Notes. Being general purpose taxonomy, it does not contain industry specific elements except for those for which the ICAI had issued a Guidance Note w.r.t their accounting aspects viz. Guidance Notes on Oil & Gas and Real Estate. It also includes MCA specific regulatory elements and a few common reporting elements to the extent they are not contrary to the accounting framework. Common reporting elements were introduced in the taxonomy to make it more comprehensive, considering the fact that the taxonomy is not extendible for this year as well i.e. filer cannot create an element in the taxonomy as per their specific requirements.

The taxonomy basically has two types of elements.

o   The “in-gaap” elements - These refer to the requirements of the Revised Schedule VI to the Companies Act, 1956, Accounting Standards and the Guidance Notes;

o   The “in-ca” elements - These refer to the requirements of the Ministry of Corporate Affairs (MCA).

Taxonomy contains linkbases which defines relationships among the taxonomy elements. There are six internationally prevalent linkbases:

a. Presentation Linkbase- Defines hierarchical relationship amongst the elements. It defines how concepts should be presented and displayed.

b. Calculation Linkbase- Defines calculation relationship amongst the elements. These calculations include simple addition and subtraction only. Weight assigned to any element shows its calculation relationship with its parent element. For eg. element with “+1” weight would be added to its parent element.

c. Label Linkbase- Provides human readable label names to every element

d. Reference Linkbase- Provides an authoritative reference to the elements.

e. Definition Linkbase- Defines the dimensional relationship among the elements in the taxonomy.

f. Formula Linkbase- Defines advanced and user defined calculations among the elements. Eg. calculation of ratios, etc.

In the C&I Taxonomy, first five out of the above-mentioned six linkbases are present as advanced calculations are catered through the validation tool of the Ministry of Corporate Affairs (MCA).

The major changes in the new C&I Taxonomy vis-à-vis earlier C&I Taxonomy are as follows:

1. The C&I Taxonomy 2012 is based on the requirements of Revised Schedule VI to the Companies Act, 1956 whereas the earlier taxonomy was based on the then prevailing Schedule VI.

2. The new taxonomy has been developed as per the latest architecture viz. IFRS architecture 2011, whereas the earlier taxonomy was based in IFRS architecture 2006.

3. Addition of Definition Linkbase and Reference Linkbase

4. The concept of ‘dimensions’ has been introduced in the taxonomy as against ‘tuples’. Dimensional concept was not supported by earlier architecture. Dimensions are used to capture the tabular data which was earlier captured line by line which made the analyses of data difficult.

5. Requirements of Industry-specific Guidance Notes viz. Guidance Note on Real Estate and Oil & Gas, and SEBI Employee Stock Option Scheme and Employee Stock Purchase Scheme guidelines, 1999 have been included in the new taxonomy which were not present in the earlier taxonomy.

Dimensions v/s. Tuples

With the use of tuples, a filer could use the elements as many times as required. Tuples were used in the taxonomy where there could be multiple information w.r.t the elements viz. in case of details of signatories to the Board Report, etc. In the figure 1.1 below, it can be seen that the highlighted element is tuple, and accordingly elements underneath the tuple can be selected as many times as the number of signatories.

Fig 1.1: Taxonomy View of Tuples in earlier taxonomy

Now, in the new C&I Taxonomy, tuples have been replaced by typed dimensions (explained in detail under “Types of Dimensions”) which are used to capture such information.

Dimensions are used to capture the tabular data in a presentable manner as against earlier taxonomy which used to capture such data line by line. Dimensions were not supported by the earlier architecture of the taxonomy viz. IFRS Taxonomy Architecture 2006. To understand dimensions, you must be familiar with the following terms:

Table (also called as Hypercube) is the collection of dimensions together with the tagged values. Table is the highest level of grouping item in Dimensions. It must contain at least one “Axis” and at least one “Line Item”. It is used to capture the tabular data.

Axis is used to create columnar axis in the table with the help of “members”. Each table must contain at least one “Axis”. However, table can contain more than one “Axis”. For eg. In the table of “Borrowings”, 3 axes have been used.

Members are the description arranged on the horizontal axis of the table.

Line Items are group of the regular elements which appear in the vertical axis of the table. The values are tagged to the line item alongwith the applicable members from the table.

Fig 1.2 Tabular view of Long term trade receivables

Types of Dimensions

1. Explicit Dimensions: In this type of dimensions, members are explicitly defined under an axis. For eg. In “Notes-Share Capital”, members are explicitly defined under the “Classes of share capital [Axis]”. Filer can use only the given number of members.

2. Typed Dimensions: In this type of dimensions, members are not defined under the axis. It has been left on the part of filers to create any number of members under the axis as per their specific requirement. For eg. In the case of signatories to the Board Report, no members have been defined under the “Directors signing board report [Axis]” thereby enabling the filer to create any number of members as per their requirement.

Fig: 1.3: Taxonomy View of Typed Dimensions in the new Taxonomy

In the dimensions, “Members” are defined as columns and the corresponding line items would appear in the row side to present it in tabular format. Every line item can be linked with a member and be tagged with the value.

For instance, there is a figure of Rs. 15,000/- (say) for depreciation on owned vehicles in the note of tangible assets. For XBRL tagging purposes, the line item “DepreciationTangibleAssets” need to be tagged with Rs. 15,000/- alongwith the following members:

            a. VehiclesMember

            b. OwnedAssetsMember

            c. AccumulatedDepreciationAndImpairmentMember

Accordingly, this would be presented as below

Fig. 1.4: Tabular view of the tagged data

In furtherance to this, it was observed that certain “members” would not be applicable to some of the line items, thus there arises a need to freeze those “members” for such line items. Accordingly, a new concept called as “notAll hypercubes” has been introduced in the taxonomy through which certain “members” would become disable for some of the line items of that table. For eg. In the table “Classification of borrowings [Table]”, the line item “Nature of security” has been frozen for the member “Unsecured borrowings [Member]” as there cannot be any security for the unsecured borrowings.

Business Rules

Business Rules are built as validation checks in the “Validation Tool” released by the MCA. The Business Rules mainly comprises of the following sheets:

1. Specific Rules: All the elements are listed in the sheet and any rule if applicable on any element is mentioned against the element. For instance, “Reserves and Surplus” appearing on the face of Balance Sheet is a mandatory element. Thus a filer has to enter a value against this element.

The following broad rules are made in this category:

            a) This is a mandatory field- It means the value against the element have to be tagged. In case, the company does not have such element in its Financial Statements, it need to fill “0” (in case of monetary element) or N.A. (in case of text element) against those elements.

            b) Should be greater than or equal to zero- It does not mean that the element is mandatory to be entered. It means that in case the value is entered, it cannot be a negative value.

            c) The detailed table is mandatory in case “Yes” is selected for any corresponding element- It means that in case any element for eg. “Whether CARO is applicable” is tagged as Yes, the CARO Report has to be tagged in detail in the tabular format. Similar is the case with “Related Party Transactions”, etc.

2. Generic Rules: These are the general business rules to be complied with while creating the instance documents (XBRL financial statements). These are not element specific. For eg. there is one generic rule which states that “It should be mandatory to enter atleast one child element if parent element is entered and vice-a-versa”. It implies that this rule has to be followed throughout the complete tagging process.

3. Applicable ELR (Extended Link Role): This sheet explains the applicability of all ELRs to the applicable instance documents viz. ELR [200100] Notes - Share capital is applicable to the instance document of “Balance Sheet” only and ELR [100200] Statement of profit and loss is applicable to the instance document of “Profit and Loss” only. In case of ceratin ELRs, applicable instance document is not mentioned. Thus, such ELRs may be tagged in both the instance documents viz. Balance Sheet and Profit & Loss. [Refer the para “Filings with MCA”]

4. Mandatory line items: This sheet enlists the line items which are mandatory only in case the applicable dimension table is used. For eg. in case filer uses “Details Of Noncurrent Investments Table”, the following line items under this table would become mandatory for the members:

a. Type Of Noncurrent Investments

b. Class Of Noncurrent Investments

c. Noncurrent Investments

d. Name Of Body Corporate In Whom Investment Has Been Made

5. Exempt Parent and Child members- Dimensions: There is a generic business rule which states that “parent member of an axis shall be mandatory to enter in case value has been entered in any of its child members and vice versa”. This sheet enlists the exemption from the stated generic business rule. And on similar footings, there is one sheet “Parent child exempt-calculation” for the line items/ elements which are not covered under dimensions.

All the Business Rules must be complied with while creating the valid instance documents in order to file with the MCA. Only valid instance documents would get validated through the Validation Tool of the MCA. After the successful validation, filer needs to pre-scrutinize the instance documents through the same validation tool wherein the data is validated online from the information available on the MCA portal viz. CIN, PAN, etc.

 Scope and Level of Tagging

This document explains the level of tagging whether any information is required to be tagged in detail or only block-text tagging is required. For eg. in previous year, related party transaction were required to be tagged in detail whereas Auditors Report and Directors Report were required as block-text tagging.

For the current year tagging, the scope or level of tagging would not be changed besides some minor changes like Auditors Report is now also required to be tagged in detail and certain elements of Directors Report would also be tagged in detail.

Certification of XBRL Financial Statements

The XBRL Financial Statements were required to be certified by a practicing professional viz. CA/CS/CMA vide General Circular No: 57/2011 issued by the MCA on 28th July, 2011. Practicing Professional needs to ensure the correctness, completeness and accuracy of the XBRL Financials vis-a-vis the financial statements which had been adopted at the Annual General Meeting of the company.

The certification language has been reproduced below:

“It is hereby certified that I have verified the above particulars (including attachment(s)) from the audited financial statements of the Company and that all required attachment(s) have been completely attached to this form. It is further certified that the attached XBRL document(s) fairly present, in all material respects, the audited financial statements of the company, in accordance with the XBRL taxonomy as notified under Companies (Filing of documents and forms in eXtensible Business Reporting Language) Rules, 2011.

It is confirmed that the attached XBRL document(s) are the XBRL converted copy(s) of the duly signed Balance Sheet and all other documents which are required to be annexed or attached to the Balance Sheet as required under Section 220 of the Companies Act, 1956.”

Practitioner may refer “Guidance Note on Certification of XBRL Financial Statements” issued by the Institute of Chartered Accountants of India for the better understanding of the task of certification and to ensure a correct certification.

Filings with MCA

As already mentioned, Cost Audit and Cost Compliance Reports would also be filed with the MCA this year alongwith the Annual Financial Statements in XBRL mode.

As per MCA mandate the companies are required to prepare two separate Instance documents for the filing purposes:

1. Balance Sheet Instance Document

2. Profit & Loss A/c Instance Document

And in case the company is also preparing the consolidated financial statements then it is required to prepare four instance documents for filing with the MCA:

1. Balance Sheet Instance Document Standalone

2. Profit & Loss A/c Instance Document Standalone

3. Balance Sheet Instance Document Consolidated

4. Profit & Loss A/c Instance Document Consolidated

Similar to previous year, extensions have not been allowed by the MCA for this year as well. Thus, filer would not be allowed to create/add any element in the core C&I Taxonomy to meet its own specific reporting requirements.

But as a step forward, the Institute of Chartered Accountants of India has constituted a committee for approving extensions in the core taxonomy itself by releasing new versions of the taxonomies in regular intervals.

The main objectives of the committee would be:

1. To add the element in the core taxonomy itself to cater to the industry requirements so as to make the XBRL financial statements similar to the financial statements adopted at the Annual General Meeting.

2. to suggest the suitable element, in case it is present in the taxonomy itself.

Conclusion

The XBRL Regulatory Tool was employed for conducting technical scrutiny on XBRL filings made by companies. Three or more alerts were generated for 738 companies, which have been referred to RD/ROC for examination. [Refer MCA Monthly Newsletter May 2012]. Now, the focus of the Ministry of Corporate Affairs would be more on the quality aspects of the XBRL Financial Statements. It is hoped that professionals are now poised to welcome the second phase of XBRL Implementation with the hands wide open.