What is XBRL?
“What barcoding did for products is what XBRL will do for financial information – Consistency and uniformity in financial reporting is key for our future” – Service Provider
XBRL stands for eXtensible Business Reporting Language. It is a technology language for the electronic communication of business and financial data which is being implemented in an increasing number of countries around the world. It provides major benefits in the preparation, analysis and communication of business information. It also offers cost savings, greater efficiency and improved accuracy and reliability to all those involved in supplying or using financial data.
How XBRL works?
The idea behind XBRL is simple. Instead of treating financial information as a block of text – as in a standard internet page, spreadsheet or a printed document – it provides an identifying tag for each individual item of data. For example, company net profit or net current assets have their own unique tags which are understandable to computers. These tags contain information about the item, including its description e.g. ‘accounts receivable’, its value and currency and whether the amount is a debit or credit.
All the elements or tags are grouped together into a collection of financial and business reporting terms known as a ‘taxonomy’. These taxonomies are available free and are downloadable from the websites of XBRL International, standard setting bodies and specific country XBRL websites. XBRL is extensible, meaning that the terms available for use can be customised so that companies using XBRL can create their own elements – called “extensions” – to describe a unique reporting situation.
What can it do?
The introduction of XBRL tags enables automated processing of business information by computer software, cutting out laborious and costly processes of manual re-entry and comparison. Computers can recognise the information in an XBRL document, select it, analyse it, store it, exchange it with other computers, and present it automatically in a variety of ways for users. XBRL greatly increases the speed of handling of financial data, reduces the chance of error and permits automatic checking of information.
Companies can use XBRL to save costs and streamline their processes for collecting and reporting financial information. Consumers of financial data, including investors, analysts, financial institutions and regulators, can receive, find, compare and analyse data much more rapidly and efficiently if it is in XBRL format.
XBRL can handle data in different languages and accounting standards. It can flexibly be adapted to meet different requirements and uses. Data can be transformed into XBRL by suitable mapping tools or it can be generated in XBRL by appropriate software.
XBRL is not an accounting standard and will not change what is reported, only how it is reported.
The South African XBRL version
The members of XBRL South Africa envision a time when all financial and other business information produced in South Africa will be done in an XBRL format. This includes all information produced by all organisations internally in an electronic format and any information transferred electronically to regulators and other stakeholders or publish on the internet.
If all information could be produced in an intelligent XBRL format it would save organisations, regulators such as the SARS, the FSB and the country, hundreds of millions of Rands. It would also speed up the flow of information and make it much more usable since it is much easier to analyse, aggregate or compare in an XBRL format.
By adopting XBRL, the CIPC embraces international best practises. Due to the powerful analysis capability of XBRL, both the operational efficiency and regulatory effectiveness of the CIPC will be vastly improved.
How does the introduction fo XBRL affect my business?
With the goal of improving efficiency, effectiveness and quality of financial reporting in mind, CIPC implemented XBRL and made it mandatory for customers to submit their Annual Financial Statements to CIPC using inLine eXtensible Business Reporting Language as a standard.
CIPC will officially roll out XBRL reporting as of 1 July 2018. The first date of submissions via XBRL, will therefore be the first date of submission that falls on or after 1 July 2018, irrespective of the year of their latest final approved audited Annual Financial Statements. Entities are required to submit their latest, final approved audited Annual Financial Statements on the same date that their Annual Returns becomes due.
As per the current compliance process in the Act, entities submit their Annual Returns 30 business days after the annual anniversary of their Date of Incorporation, when submission of Annual Financial Statements applies to them, except when an entity is a Closed Corporation. Closed Corporations have 60 business days to submit their Annual Financial Statements from the first day of the month of the anniversary of their date of incorporation.
How do I know if my business needs to submit annual financial statements to CIPC?
In terms of Section 33 of the Companies Act 71 of 2008, and regulations 28, 29 and 30 of the Companies Regulations of 2011, the following entities need to submit their Annual Financial Statements through XBRL as and when they submit Annual Returns:
- All public companies
- Private or personal liability companies (qualifying and currently submitting using PDF)
- State owned companies
- Close corporations (qualifying and currently submitting using PDF)
Private or personal liability companies and closed corporations that are required to be audited by the Companies Act, 2008 or regulation 28, must file a copy of the latest approved Audited Financial Statements on the date that they file their annual return with the CIPC. The following private or personal liability companies and closed corporations are required to have their annual financial statements audited:
- Any entity, in the ordinary course of its primary activities, it holds assets in a fiduciary capacity for persons who are not related to the company, and the aggregate value of such assets held at any time during the financial year exceeds R5 million;
- Any entity that compiles its AFSs internally (for example, by its financial director or one of the owners) and that has a Public Interest Score (PIS) of 100 or more;
- Any entity that has its AFSs compiled by an independent party (such as an external accountant) and that has a Public Interest Score (PIS) of 350 or more;
- Any entity if it has opted to have its Annual Financial Statements audited or voluntarily included audit as part of its Memorandum of Incorporation (MOI).
Trusts are currently not regulated by the CIPC and therefore don’t need to submit Annual Financial Statements to CIPC.
Submission of consolidated and separate annual financial statements
An entity that controls one or more other entities are required to submit consolidated Annual Financial Statements. Every domestic subsidiary needs to submit their own individual Annual Financial Statements, while foreign subsidiaries not registered with the CIPC don’t have to. Parent entities must submit their own entity details plus consolidated details for ALL subsidiaries (domestic and foreign) in the same set of Annual Financial Statements. When a parent and subsidiaries have different dates of incorporation, the parent entity submit consolidated data for its subsidiaries as up to its own date of incorporation.
My business is required to submit annual financial statements to CIPC – How do I approach the XBRL requirement?
Those entities who have outsourced the preparation of their Annual Financial Statements to a third party, can reach out to these service providers and investigate whether these preparers can file the Annual Financial Statements on the entity’s behalf.
The Tax Shop’s Professional Accountants make use of state of the art software when compiling Annual Financial Statements, which is compatible with XBRL. Let the Professional Accountants at The Tax Shop handle your business’ XBRL compliance needs so that you can focus on what’s important – growing your business! Contact The Tax Shop to make your life easier.