In a move that marks a stronger drive to ensure transparency, ease and lucidity in corporate governance, the government is hastening the process of filing corporate information based on the extensible business reporting language (XBRL).
XBRL is emerging as a global standard in regulatory reporting. It enables easy filing of reports to the Internet in a manner that helps investors and regulators keep tabs on the accuracy of information regarding companies.
Companies may be mandated to file their financial reports using XBRL from the new fiscal year beginning in April, sources familiar with the matter told Hindustan Times.
A decision to this effect was taken by the ministry of corporate affairs last week and a meeting to implement the process will be held in the ext few weeks to bring in all stakeholders including representatives of the capital market regulator, the Securities and Exchange Board of India (SEBI).
XBRL is an electronic format for communication of business and financial data that improves accuracy while highlighting errors and gaps that can immediately be addressed. Financial data filed with the XBRL are displayed in a standard format and are easily retrievable from computer networks.
The advanced software would facilitate detailed analysis of the underlying data using standard data analysis tools.
In the initial phase, companies with revenues above a specified limit will be mandated to use XBRL while filing corporate information reports.
“To begin with, we want only the top and big companies to start using the new software for filing their returns,” a government source told Hindustan Times.
The Institute of Chartered Accountants of India (ICAI) is also keen on introducing the new system. The Reserve Bank of India has already asked all banks — public, private and foreign — to introduce the XBRL format while filing all their financial statements.
Though this software language would raise the cost of filing for companies, a government official said that the new methodology would bring in more accuracy in corporate financial reports.