The Securities and Exchange Board of India (Sebi) is looking forward to use the extensible business reporting language (XBRL) technology in the near future where listed companies filing their financial statements with the board will be required to do so in XBRL compatible format. The XBRL is a way of electronic communication of business and financial data and is of immense utility to the capital markets and the investing community.
The Institute of Chartered Accountants of India (ICAI) has taken the task of the development of general purpose XBRL taxonomy for commercial and industrial companies. This taxonomy, which is based on the requirements of the Indian accounting standards and various Indian corporate laws, is near finalisation. The group of the ICAI is chaired by the president of the institute, Ved Jain and comprises among others, various regulators such as Sebi, the ministry of corporate affairs, Reserve Bank of India and the Insurance Regulatory and Development Authority.
ICAI president, Ved Jain said, “This move will give corporates a taste of the XBRL technology and address their concerns, if any. Subsequent to the development of general purpose taxonomy, the institute would take up the development of taxonomy for the financial sector, specifically banks and non-banking financial companies.”
XBRL would be beneficial for those who collect business data, including governments, regulators, economic agencies, stock exchanges, financial information companies and the like and those who produce or use it, including accountants, auditors, company managers, financial analysts, investors and creditors. XBRL allows the users of financial statement information to electronically retrieve data with greater assurance of accuracy. The idea behind XBRL is that instead of treating financial information as a block of text, the XBRL technology would allow electronic tagging of each individual item of data so that computers can work on the information using a set of rules. The electronic tags that are applied are standardised and are contained in taxonomies which are essentially the dictionaries used by XBRL that define the specific tags for individual items of data.
Seeing the rising importance of XBRL as an effective means of communicating financial information and the plethora of benefits it has to offer, ICAI constituted the XBRL group in 2007 for undertaking the development and promotion of XBRL in India.
ICAI is also aiming to establish the Indian jurisdiction of XBRL international, where it will become the local entity, which will encourage the development and adoption of XBRL in India and represent Indian interests at the international level.
By the end of September, ICAI will be applying to XBRL international to establish a provisional jurisdiction of XBRL in India.