New Delhi: To ease the implementation of an online business reporting language to file financial statements with India’s registrars of companies, the corporate affairs ministry has published a glossary of terms and asked for public feedback by 30 April.
“Based on the people’s response, the ministry will take a call and bring about a change in the taxonomy (glossary and classification of necessary business terms), if required, and decide to make it extendable or not,” a ministry official said, requesting anonymity.
India is implementing the use of eXtensible Business Reporting Language, or XBRL, for Web-based filing of financial statements related to the fiscal year ended 31 March.
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The first phase of mandatory filing of balance sheets and profit and loss accounts using XBRL can continue till September without a late fee, a 31 March ministry circular said.
Filing in XBRL has been made mandatory for all listed companies and their units and those that have revenue of Rs100 crore or more or paid-up capital of Rs5 crore.
Use of the computer language will later be applicable to all 900,000 companies registered in India.
XBRL makes collating business data easier and can create a common platform from which data can be extracted by different agencies such as market regulator Securities and Exchange Board of India or the Reserve Bank of India.
The transition to XBRL needs preparedness and sticking to timelines will help, according to Harriet Mossop, associate director and national leader, XBRL services in India, at consultancy Ernst and Young. Certain areas, however, need clarification, she said.
“Whether XBRL will in the first phase be limited to profit and loss account and balance sheet or entire financial statements (needs clarification),” she said. “If it is being extended to the entire financial statement, then an extendable taxonomy or a more extensive pre-defined taxonomy will be required.”
An extended glossary of terms will allow for interchangeable usage such as turnover and revenue, which US companies are free to use but which is not allowed by the International Accounting Standards Board.
Companies will have to “wait and see” since the ministry has not mentioned whether the classification “will be made extendable”, said Ram Iyer, director of accounting advisory services at consulting firm KPMG.
Not making it extendable right now would be acceptable because the idea is to standardise data, and therefore, comparable, he said.
“Taxonomy is the core to XBRL filing, and therefore, it has to be in line with standards set by XBRL International,” said Debdas Sen, executive director, PricewaterhouseCoopers India. “The ministry is moving close to that, and seeking comments will further help.”