Transition to XBRL filings for listed entities

A global language used for company reporting, XBRL is used to transmit financial and business data electronically. The analysis, preparation, and sharing of company information are facilitated by XBRL filing. Now we will have a look into the How to File Financial Statements in XBRL Format?

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What do you mean by XBRL?

XBRL, an acronym for extensible Business Reporting Language, is a language transforming business reporting globally by enabling the electronic exchange of business and financial data. It offers significant benefits for business information preparation, analysis, and communication. For everyone supplying or utilizing financial data, it provides lower costs, more effectiveness, and higher accuracy and dependability. Many nations have already adopted it, and the number of places where XBRL is being used globally is quickly increasing.

Background of XBRL Compliance Filing

According to the SEBI Listing Regulations, listed companies must provide periodic compliance statements to the exchanges within the allotted time frames. Each exchange offers unique, personalized electronic reporting tools to do this. In essence, listed companies have to submit compliance data in a manner and structure specific to each exchange, individually, on each exchange. In addition, listed companies submit separate compliance statements in XBRL
format to the MCA. Listed companies responded by increasing their efforts.

The NSE has decided to implement an XBRL-based compliance filing system for the advantage of listed companies. This will make it easier for listed businesses to upload compliance data produced in XBRL format on other exchanges to the NSE.

Benefits of XBRL Filing

The benefits of XBRL filing include-

• XBRL makes data readable using two documents– Taxonomy and instance document. Taxonomy defines elements and their relationships based on regulatory requirements. Using the taxonomy, companies can map their reports and generate a valid XBRL instance document. In addition to the XBRL tag from the taxonomy, information such as a unit of measure, data period, reporting scope, etc. is included in the instance document.
• It increases efficiency and accuracy and improves reliability for all involved in providing or using business and financial data.
• Through XBRL, the usability of financial statement information increases because the need to re-key financial data for analytical and other purposes can be eliminated. By presenting its statements in XBRL, a company can benefit investors and other stakeholders.

Companies which are required to File Financial Statements in XBRL

Under section 137 of the Companies Act 2013, the following categories of companies shall file their financial statements and other documents with the ROC in electronic form AOC-4 XBRL as per Annexure-I

How to File Financial Statements in XBRL Format?

The steps to follow for a successful XBRL filing are:

• Starting with the company’s financial statements, map each financial element of the company to a corresponding element in the published taxonomy.
• Creating an instance document by labeling the elements of the XBRL taxonomy with different accounting heads in the company’s books.
• ​​Once the document is ready, you need to verify that all information has been correctly captured and that it is a valid instance document.
• Download the XBRL validation tool from the MCA portal.
• Validation must be done against the latest and correct version of the taxonomy prescribed by the MCA.
• A working internet connection is mandatory to perform this step.
• Separate instance documents need to be attached concerning separate financial statements and consolidated financial statements
• Upload AOC-04 XBRL Form to MCA Portal.

Facility for Filing LODR Disclosures in XBRL Format- Latest Update

Bombay Stock Exchange announces XBRL format for filing disclosures under SEBI LODR from December 09, 2023.

• Loss of share certificate/issuance of duplicate share certificate
• Closing the trading window
• The process of resolving a company’s insolvency

In the initial phase, the PDF files will be considered by the exchange to comply with regulation 30 of SEBI LODR. Furthermore, all the mentioned entities would also be required to submit a submission in the XBRL mode within 24 hours of the submission of the said submission in PDF format. At a later stage (the date will be specified separately), the exchange will move to XBRL filing only. It should be noted that the XBRL tool for the above entities is available in the XBRL section of the Listing Center

Conclusion

While XBRL-based filing has tremendous advantages, both for data collection purposes and for investors and researchers who require data in the form of statistics for their analysis and informed decisions, it has limitations for the company in terms of flexibility and convenience. Although PDFs that are considered for compliance purposes can currently be used to disclose such information, it would be difficult to include such information if a transition to full XBRL-based disclosure is made.

In case of any query regarding the XBRL filings, a team of expert advisors from Legal Window is here to assist you at every step. Feel free to reach us at [email protected].