Applicability of XBRL Reporting Under Companies Act, 2013 By Divyansh Sachdeva


In the growing scenario with the thought to ease the business structure and their compliances annually, quarterly or else, it is very pertinent to adapt the changes and upgrade self into the new and better phase in various business application fields.
 
One of such change/ up gradation is brought to up by XBRL Reporting stand for Extensible Business Reporting Language is a freely available and global framework for exchanging business information developed by XBRL International, an international non-profit consortium of approximately 450 major companies, organizations and government agencies working together to build the XBRL language and promote and support its adoption beginning in 1998. XBRL allows the expression of semantic meaning commonly required in business reporting. The language is XML-based and uses the XML syntax and related XML technologies such as XML Schema, XLink, XPath, and Namespaces. One use of XBRL is to define and exchange financial information, such as a financial statement.
 
Keeping the words precise, it is a language for the electronic communication of business and financial data which is revolutionizing business reporting around the world. It is a standard that was developed to improve the way in which financial data is communicated, making it easier to compile and share this data. It is a specification that is used for organizing and defining data. XBRL uses tags to identify each piece of financial data, which then allows it to be used programmatically by an XBRL-compatible program.

CRUX
: XBRL is a standards-based way to communicate and exchange business information between business systems.

Merits:

The major benefits are
  • Preparation, Analysis, and Communication of Business Information
  • Reduces the Manual Data entry
  • Cost and Time Efficient,
  • Meeting IFRS requirement
  • Qualitative Information and Decision making
  • Allows the easy transmission of data between businesses
  • improved accuracy and reliability to all those involved in supplying or using financial data.
The use of XBRL does not imply an enforced standardisation of financial reporting. Contrary Speaking, the language is flexible and is intended to support all current aspects of reporting in different countries and industries.  Its extensible nature means that it can be adjusted to meet particular business requirements, even at the individual organisation level. Once data is gathered in XBRL, different types of reports using varying subsets of the data can be produced with minimum effort. Not only can data handling be automated, removing time-consuming, error-prone processes, but the data can be checked by software for accuracy. The software can also immediately validate the data, highlighting errors and gaps which can immediately be addressed. It can also help in analysing, selecting, and processing the data for re-use
 
Regulators and government departments can assemble, validate and review data much more efficiently and usefully than they have hitherto been able to do.
 
Applicability under Companies Act- STATUTORY REQUISITE
 
The Central Government makes the following rules to amend the Companies (Filing of Documents and Forms in Extensible Business Reporting Language) Rules, 2015 though G.S.R.692(E) dated 9th September, 2015.
 
Rule 3 [Companies (Filing of Documents and Forms in XBRL) Rules, 2015] mandates the following Class of companies to file their Financial Statements and other documents under section 137 of the Act with the Registrar in e-form AOC-4 XBRL as per Annexure-I:-
 
  1. Indian Listed Companies and their Indian subsidiaries;
  2. Companies having paid up capital of Five Crores rupees or above;
  3. Companies having turnover of One hundred Crores rupees or above;
  4. All companies required to prepare their financial statements in accordance with Companies (Indian Accounting Standards) Rules, 2015
Note 1: Companies preparing their financial statements under the Companies (Accounting Standards) Rules, 2006 shall file the statements using the Taxonomy provided in Annexure-II on the other hand companies preparing their financial statements under Companies (Indian Accounting Standards) Rules, 2015, shall file the statements using the Taxonomy provided in Annexure-II A:
 
Note 2: Non-Banking Financial Companies, Housing Finance Companies and Companies engaged in the business of banking and insurance sector are outside the ambit of these rules.
 
Rule 4 [Companies (Filing of Documents and Forms in XBRL) Rules, 2015] mandate Company to furnish cost audit report and other documents to the Central Government under sub-section (6) of section 148 of the Act and rules made there under, shall file such report and other documents using the XBRL taxonomy Annexure-III for the financial years commencing on or after 1st April, 2014 in e-Form CRA-4 specified under the Companies (Cost Records and Audit) Rules, 2014.
 
Here, with respect to rule 3 sub-rule 1 and clause (iv), a brief applicability of Indian Accounting Standard under the Companies (Indian Accounting Standards) Rules, 2015 is mentioned below:-
 

List of Companies

Basis of Applicability

Date of Event Applicability

Companies other than NBFC

 

 

Any Company and its Holding, Subsidiary, Joint Venture or Associate Company

Voluntary

Basis

on or after 1st April, 2015

a.     {Listed Companies or in the process to be listed on Stock Exchange and Unlisted Companies} having Net Worth INR 500 Crore or more

b.    Holding, Subsidiary, Joint Venture or Associate Companies of mentioned Clause.

Mandatory

Basis

on or after 1st April, 2016

(with Comparative Figure

of previous year)

a.     Listed Companies or in process to be listed on Stock Exchange + Net worth Less than 500 Crore

b.    Unlisted companies having net worth of INR 250 Crore - 500 Crore.

c.     Holding, Subsidiary, Joint Venture or Associate Companies of mentioned Clause

Mandatory

Basis

on or after 1st April, 2017

(with Comparative Figure

of Previous Year)

Non-Banking Financial Companies (NBFCs)

 

 

a.     Companies having net worth of rupees five hundred crore or more;

b.    holding, subsidiary, joint venture or associate companies of above-mentioned companies

Mandatory

Basis

on or after 1st April, 2018

(with Comparative Figure

of Previous Year)

a.     Listed NBFC Companies or in process to be listed on Stock Exchange + Net worth Less than 500 Crore

b.    Unlisted NBFC companies having net worth of INR 250 Crore - 500 Crore.

c.     Holding,  Subsidiary, Joint Venture or Associate Companies of mentioned Clause

Mandatory

Basis

on or after 1st April, 2019

(with Comparative Figure

of Previous Year)

Note: Once a company starts following the Indian Accounting Standards (Ind AS), it shall be required to follow the Indian Accounting Standards (Ind AS) for all the subsequent financial statements even if any of the criteria specified in this rule does not subsequently apply to it.

 
How Does The XBRL Work?
 
XBRL assists in reading the data, with the aid of Following documents:

  1. Taxonomy
  2. Instance document.
The Former One defines the elements and their relationships based on the regulatory requirements. Using the taxonomy prescribed by the regulators, companies need to map their reports, and generate a valid XBRL instance document. The process of mapping means matching the concepts as reported by the company to the corresponding element in the taxonomy. In addition to assigning XBRL tag from taxonomy, information like units of measurement, a period of data, scale of reporting etc., need to be included in the instance document.
 
Thus, Following steps are involved to conclude the preparation or filing of the financial statements:

  • To map their reports {Mapping},
  • Assigning XBRL tag{Tagging},
  • Generate a Valid XBRL instance document,
  • Validating the XBRL through Validation Tool,
  • Pre-Scrutnizing Through Validation Tool,
  • Preparation of AOC-4 XBRL ROC Form attaching XBRL XML Docs.
Documentaries

The following components of Annual reports need to be filed in XBRL Format:
 
  • Balance Sheet
  • Profit and Loss Statement
  • Cash Flow Statement- Direct or Indirect
  • Schedules related to Balance Sheet and Profit and Loss Statement
  • Significant Accounting Policies
  • Statement of change in Equity
  • Independent Audit Report and Report on Internal Financial Control
  • Director or Board Report
What if? – One fails to comply the Statutory requisite within the prescribed time limit.
 
 Penal Provisions:
 
  • Company: Fine INR 1,000.00 (One Thousand only) for everyday till default subsist max. to 10,00,000.00 ( Ten Lacs only).
  • Directors: Fine Min. 1 Lacs to Max. 5 Lacs –  OR – Imprisonment – Max. 6 months
  • CFO : Same as in the case of Directors
  • Authorised Director : Same as in the case of Directors
Reference:  www.mca.gov.in

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