The implementation of XBRL (eXtensible Business Reporting Language) which has been made mandatory from April 1, 2011, is expected to bring in more transparency in how companies declare their financials.
K Raghu, Central Council Member, ICAI, and Director, XBRL India, said, “In the coming years this format will bring in more transparency and uniformity in financial reporting. It is not just for the regulators. It benefits companies in planning their businesses well and analysing various parameters. In the next couple of years, taxonomy based on IFRS will become a standard in India,” he said at a meeting organised by the CII in Bangalore on Friday.
According to the new norms, companies with a capital of Rs 5 crore or more or turnover of Rs 100 crore or more need to follow the XBRL reporting format from the present financial year.
XBRL, an open source free language, converts financial statements of any format or reporting system into a machine-readable format that facilitates comparison and analysis quick and easy. XBRL in India is technically made by ICAI and all the regulators concerned are its members.
Website www.xbrl.org/in is dedicated to the XBRL India jurisdiction and contains information for companies.
Explaining the basic concepts of XBRL, Ramachandra Iyer, Director- Financial Services, KPMG, said, “Data flow pain points in the organisation for collating the data were addressed in XBRL irrespective of the type of ERP used for collating MIS. This is more important for consolidating the information for financial reporting or analysing the data. Comparing your financials with competitor companies is possible. XBRL converts the financial statements into electronically-readable (machine readable) format of taxonomy. This makes financial statements quickly available to any company in the world as per the GAAP of that country.”
K Balachandran, Co-Founder, IRIS Business Services, said, “There has been a shift from proprietary systems to standards-based intelligent data driven systems. Common standards reduce the complexities in financial reporting system. XBRL is a kind of business barcode for reporting world. Regulators, bankers, internal and external analysts of companies will benefit by the new reporting system.”
