XBRL converts financial statements of any format into a machine-readable format, which facilitates detailed comparison and quick analysis.
At present, XBRL reporting is applicable to all the listed companies and their Indian subsidiaries and all other companies having a paid-up capital of R5 crore and above or turnover of R100 crore and above. MCA, in a circular on XBRL issued in May, said banking, insurance, power companies, non-banking financial companies (NBFCs) and overseas subsidiaries of these companies will be exempted from this arrangement.
According to experts, although the ministry is putting the right foot forward, the corporates are facing some problems. There are a number of clarifications which are still being sought from the MCA, like the scope of filing, filing platform and mode of filing.
KPMG Accounting Advisory Services head Jamil Khatri said, Companies are supposed to file financial statements for 2010-11 in XBRL mode by September 30. But MCA came out with this circular on March 31, which gives very little time to meet the deadline. The companies will find it difficult to meet the deadline if the clarifications are not provided in reasonable time.
Former ICAI president Uttam Prakash Agarwal said, The ministry should give clear guidelines to the corporates for implementation of XBRL. Even though XBRL will involve some initial conversion costs for companies, the long-term benefits for investors and capital markets would be significant.
According to the MCA official, The ministry is keeping in consideration the smaller companies who would find the XBRL reporting tool an extra cost and is planning to rope in professionals who would provide XBRL services at lower rates.