XBRL filing process (general)
Understanding the XBRL Filing Process: A Step-by-Step Guide
In this post, we will discuss XBRL filing, a standardized electronic format for business and financial reporting. We’ll go over its application, exemptions, required documentation, filing process, and significant benefits to give you a complete understanding of this essential compliance requirement.
Let us look at these sections:
What is XBRL Filing?
XBRL is an XML-based standard for tagging business and financial reports that aims to improve the transparency and accessibility of company information by providing a standardized format. This language for electronic exchange of business and financial data has transformed the process of business reporting.
By providing a standardized electronic format, XBRL ensures that data is simple to read, understand, and, most importantly, uniform. Whether you’re creating, transferring, or evaluating corporate data, XBRL simplifies the interchange of information at all levels.
Applicability of XBRL Filing
Certain companies must file their balance sheet, profit and loss account, and e-Form AOC-4 XBRL with the Registrar of Companies (ROC) in XBRL format. This includes:
- All public companies are listed on the Indian stock exchange, along with their Indian subsidiaries.
- Companies with a turnover of ₹100 crore or more.
- Companies with a paid-up capital of ₹5 crore or more.
- Companies must prepare financial statements under the Companies (Indian Accounting Standards) Rules, 2015.
Exemptions
The following companies do not have to file their financial statements in XBRL format:
- Non-banking financial companies (NBFCs).
- Housing finance companies.
- Companies operating in the insurance or banking sectors.
Also, if a company filed its financial statements in XBRL format under Section 137 of the Companies Act, it must continue to do so, even if the criteria indicated above no longer apply.
Documents Required for AOC-4 XBRL
The eForm AOC-4 XBRL must have the following company papers attached:
- Profit and loss account
- Balance sheet
- Cash flow statement
- Schedules regarding the profit and loss account and balance sheet
- Details of subsidiaries under Section 129 of the Companies Act, 1956
- Board’s report, auditor’s report, and annual report
- Consolidated financial statements
- Comments from India’s Comptroller and Auditor General (CAG)
XBRL Filing for Cost Compliance Report and Cost Audit
The Ministry of Corporate Affairs (MCA) announced in 2012 that companies and cost auditors must submit cost audit and compliance reports in XBRL format beginning with the financial year 2011-12. Companies that are not covered by the industry-specific Cost Audit Order No. 52/26/CAB-2010, which was issued on November 6, 2012, are exempt from filing cost audit reports.
If a company’s actions or products are subject to the Cost (Accounting Records) Rules, 2011 and are included in the cost audit, no separate compliance report is required. Companies that achieve the threshold limits shown in these guidelines must still file the compliance report in XBRL.
The compliance report must be certified by an Institute of Cost Accountants of India member who is either a full-time employee or holder of a full-time Certificate of Practice. In contrast, the cost auditor’s report must be digitally signed and filed.
The company is responsible for preparing the cost audit report in XBRL format, having it approved by the board, and having it certified by the cost auditor. However, the cost auditor must submit the report to the Central Government in XBRL format. The cost auditor must also confirm that the XBRL document contains accurate data and information.
XBRL Taxonomy and Instance Document
An XBRL taxonomy describes the fundamental aspects of XBRL, data definitions, and the relationships between concepts. It can include hundreds, if not thousands, of business reporting concepts, as well as their definitions and mathematical relationships. It also gives text labels in many languages.
To create a legitimate XBRL instance document, companies must match their financial reports with the taxonomy provided by officials. This method involves combining the company’s financial data with the proper taxonomy items. In addition to assigning XBRL tags, the instance document must include information such as the reporting period, unit of measurement, and reporting scale.
An XBRL instance document is an electronic business report created in accordance with XBRL rules. It consists of facts about taxonomy elements, their descriptions, and the applicable values in a given situation. These publications are associated with at least one taxonomy that specifies labels, references, and contexts.
Benefits of XBRL Filing
XBRL filing provides many benefits for analysis and company reporting, including:
- Streamlining Data Collection.
- Ensure accuracy and reliability.
- Saving time during processing.
- Supporting thorough analysis.
- Improving reporting methodologies.
- Securing Data Management.
- Being cost efficient.
- Enabling smarter decision-making.
Step-by-Step XBRL Filing Process
- Start with financial statements: Begin by gathering the company’s financial statements.
- Map financial elements: Match each financial element in the statements to its appropriate category in the provided XBRL taxonomy.
- Prepare the instance document: Create the document by tagging the XBRL taxonomy elements with the company’s accounting heads.
- Review and verify: Double-check the instance document to ensure that all information is correct and correct.
- Download the XBRL validation tool: You can get the tool from the MCA Portal.
- Validate the document:Use the tool to check the instance document against the most recent taxonomy provided by MCA.
- Perform pre-scrutiny: Use the tool for doing a pre-scrutiny on the verified document.
- Attach the instance document: Link the instance document to Form AOC-04 XBRL. Separate documentation is necessary for individual and consolidated financial statements.
- Upload the form: Finally, upload the Form AOC-04 XBRL to the MCA Portal.
Important terms to know:
- Taxonomy: It is an electronic dictionary of cost accounting concepts. Companies utilize it to create and submit their Cost Audit and Compliance Reports to the Ministry of Corporate Affairs (MCA) in XBRL format.
- Mapping: This concerns arranging financial statement elements to corresponding elements in the published taxonomy.
That brings us to the end of our post on XBRL filing. Please post any queries in the comments section below.
