Companies which are converging with the international financial reporting standards (IFRS) from April 1, 2011 will also have to incur an additional cost of complying with the advanced reporting language tool, XBRL (extensible business reporting language). The ministry of corporate affairs has decided to implement XBRL for all companies in India from 2011. This would mean that IFRS convergent companies along with the non-convergent companies will have to start filing their documents in the XBRL format. XBRL allows the users of financial information to electronically retrieve data with greater assurance of accuracy.
At present, the top 100 companies are already using the XBRL format for financial reporting. In US, the house had approved legislation to follow XBRL for government firms which have used the tax payer money for bailout. A senior MCA official told FE, ?Companies will have to start following XBRL from 2011 onwards wherein both the IFRS convergent companies and also the non-convergent companies will have to follow this reporting tool for filing their financial documents?.
The official further said XBRL would ensure that financial data is filed in a standard format and is retrievable electronically. This would also facilitate detailed analysis of the underlying data using standard data analysis tools. 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. According to experts, XBRL will involve some initial conversion costs for companies but the long-term benefits for investors and the capital markets would be significant.
Jamil Khatri, head of accounting advisory services, KPMG said, ?XBRL filings would only involve the initial conversion cost but since it has so many long-term benefits, it would be a good move?.
XBRL would be beneficial for those who collect business data, including governments, regulators, stock exchanges, financial information companies, economic agencies and the likes and those who produce or use it including accountants, auditors, company managers, financial analysts, investors and creditors. XBRL can also immediately confirm the financial data, highlighting errors and gaps which can immediately be addressed. It also helps the user in selecting and processing the data for re-use. ICAI constituted the XBRL group in 2007 for undertaking the development and promotion of XBRL in India.