New Delhi: The government will soon decide on the next set of companies that will be required to file their financial statements in digital format after more than 23,000 companies did so in the first phase.
“More than 85% of the targeted companies in the first phase have filed their returns in XBRL (eXtensible Business Reporting Language) format and the ministry (corporate affairs) will soon take a call on what class of companies to include in the second phase,” said a ministry official who did not want to be named.
Securities and Exchange Board of India. Photo By Abhijit Bhatlekar/Mint
The ministry of corporate affairs (MCA) has called a meeting of all stakeholders, including those in the field of training and providing software, on 1 February. There are around 850,000 firms in India and the ministry wants them to switch to the new format as data representation is more precise and gives firms less scope to manipulate numbers. Financial statements are currently submitted in PDF (portable document format) files.
“Eventually, the ministry plans to make all of them use XBRL format to represent their financial data, which will not only bring clarity in data presentation but also consistency,” said the official.
Regulators such as the Reserve Bank of India and the Securities and Exchange Board of India have also started implementing XBRL. As a result, companies will gain after switching to XBRL as they can use the same database for filing with different regulators.
In the first phase, companies with a paid-up capital of Rs 5 crore and above, or revenue of Rs 100 crore, were required to file statements for the year ended 31 March in XBRL format. MCA had worked out a rough estimate of 30,000 companies in the initial phase. The second phase will pertain to financial statements for the year ending March 2012.
Experts, software vendors and companies have given suggestions to MCA for a smooth transition to XBRL, the official said.
Vinod Kashyap, director of NextGen Knowledge Solutions Pvt. Ltd, which provides training to professionals such as chartered and cost accountants on XBRL, said glitches remain in the new format.
“We have, therefore, asked MCA that technical and business documentation which includes guidance on taxonomy architecture, rules and principles used during development of taxonomy as well as extension of taxonomy be prepared and made available,” said Kashyap.
Taxonomy is a glossary of financial terms used to describe elements; its extension means adding more sector and company-specific terms. So far, the ministry has used a fixed taxonomy of 3,200 elements.
Kashyap said these numbers are far fewer when compared with the 16,000 elements in the taxonomy used for XBRL filings in the US.
Sectors currently exempt from XBRL filing such as banking, insurance, non-banking financial firms and power companies should be included in the second phase, he said.
For this to happen, either sector-specific taxonomies have to be developed or extensions be provided in the existing taxonomy.