XBRL filing for the year 2013-14 has been started without any change in the taxonomy for the current year.
Accounting Professionals
We are a team of CAs and CSs working in the area of accounting and XBRL and handling the queries of professionals throughout India
Sunday, 22 June 2014
Monday, 7 October 2013
CASH FLOW STATEMENT- Hidden Aspects
A
Cash Flow Statement no doubt helps the investor in making economic decisions
as it helps in ascertaining the entities ability and certainty to generate cash
and cash equivalent. As we all know that the way market and scope of merger,
acquisitions takeover, etc., has grown over the last decade entities cash flow
stream have a huge impact on the entities valuation as going concern. One of
the advantages of the Cash flow Statement is that it helps in bifurcating the
entities cash flows (inflow/outflow) in operating activities, investing
activities and financing activities respectively.
Enactment of Companies
Act, 2013 have certainly is going to be change the financial reporting requirements
for the Indian Entities including preparation of Cash Flow Statement need to be
presented by the entities as a part of financial statements. As per the
definition prescribed u/s 2 (40) of the Companies Act, 2013, a set of financial
statement includes Cash Flow Statements. However certain categories of
Companies such as One Person Companies (OPC) and Dormant Companies are exempted
from the requirement of preparing Cash Flow Statements. It is also need to be
kept in mind that after the enactment of Companies Act, 2013, it is expected
that the process of notifying IFRS converged Indian Accounting Standards (Ind
ASs) may be expedited by the Government.
Existing AS and Ind AS dealing with Cash
Flow Statements defined Cash Equivalent as follows:
Cash
equivalents are short-term, highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant
risk of changes in value.
Some of the people
believe that an investment such as fixed deposits, debentures with a remaining
maturity period of less than three months at the balance sheet date constitute
cash equivalent, which is absolutely incorrect. As per the definition cash
equivalent are 'short term' investment, which means a investment with a
original maturity period of less than three month or less from the date of acquisition rather than remaining
period to maturity from the balance sheet date. For example, sometimes it does
happen that pending approval for some project or due to other reasons entities
invest their money in the very short term investment options such as fixed deposits,
treasury bills, etc., such investment qualifies to be termed as Cash
Equivalent.
Contributed by-
CA. Achin Poddar
Monday, 23 September 2013
XBRL 2012-13
Many companies have filed in XBRL for this year as there is no change for this year's XBRL mandate of the Ministry of Corporate Affairs
Understanding XBRL
With the
issue of General Circular No. 16/2012 dated July 6, 2012, the Ministry of
Corporate Affairs (MCA) has kick-started the second phase of XBRL
Implementation wherein it has marginally increased the scope including those
companies also who were required to file their financials in XBRL format last
year. It implies that companies who had filed in XBRL voluntarily last year,
they are not covered under the mandate of XBRL this year as well. After the
successful completion of first phase of XBRL Implementation last year, the MCA
has also covered Cost Audit Report and Cost Compliance Report into the ambit of
XBRL filings from this year vide General Circular No. 18/2012 dated July 26,
2012.
eXtensible Business Reporting Language (XBRL) is, now,
not a new concept. We all are aware that instead of treating financial information as a
block of text, XBRL provides a computer-readable tag to identify each
individual item of data. By attaching identifying tags to individual pieces of
data, a business reporting document becomes “intelligent” data, allowing the
exchange of business reporting data by encoding the information in a meaningful
way. For assigning an appropriate “tag” to the data, taxonomy (dictionary of
all financial and non-financial reporting requirements) was required.
Background
ICAI recognising the importance of XBRL
internationally, in 2007, had constituted a Group for promotion and development
of XBRL in India. The Group comprised of the representatives of Securities and
Exchange Board of India (SEBI), Ministry of Corporate Affairs (MCA), Reserve
Bank of India (RBI), Insurance Regulatory and Development Authority (IRDA),
National Stock Exchange, Bombay Stock Exchange and Infosys. In December 2008, initiated
by the Institute of Chartered Accountants of India (ICAI), the Indian XBRL
Jurisdiction, i.e., XBRL India of XBRL International (XII) has been
constituted. The jurisdiction was
provisional (non-voting) in nature for a period of 2 years i.e. upto December
2010 after which it became an established jurisdiction.
While XBRL is being adopted by other regulators in
India, the Ministry of Corporate Affairs has taken a lead in its implementation
by extending the mandate of XBRL filings to around 30,000 companies in its
first year of XBRL Implementation and discontinuing the pdf filings for those
companies. Banking Companies, Power Companies and NBFCs were exempt from XBRL
filing owing to non-availability of taxonomies specific to their reporting
requirements.
C&I Taxonomy
The C&I Taxonomy had been prepared as per the
requirements of the Revised Schedule VI to the Companies Act, 1956 and
disclosure requirements under the Accounting Standards and Guidance Notes.
Being general purpose taxonomy, it does not contain industry specific elements
except for those for which the ICAI had issued a Guidance Note w.r.t their
accounting aspects viz. Guidance Notes on Oil & Gas and Real Estate. It
also includes MCA specific regulatory elements and a few common reporting
elements to the extent they are not contrary to the accounting framework.
Common reporting elements were introduced in the taxonomy to make it more
comprehensive, considering the fact that the taxonomy is not extendible for
this year as well i.e. filer cannot create an element in the taxonomy as per
their specific requirements.
The taxonomy basically has two types of elements.
o The “in-gaap” elements -
These refer to the requirements of the Revised Schedule VI to the Companies
Act, 1956, Accounting Standards and the Guidance Notes;
o The “in-ca” elements -
These refer to the requirements of the Ministry of Corporate Affairs (MCA).
Taxonomy contains linkbases which defines
relationships among the taxonomy elements. There are six internationally
prevalent linkbases:
a. Presentation Linkbase- Defines
hierarchical relationship amongst the elements. It defines how concepts should
be presented and displayed.
b. Calculation Linkbase- Defines
calculation relationship amongst the elements. These calculations include
simple addition and subtraction only. Weight assigned to any element shows its
calculation relationship with its parent element. For eg. element with “+1”
weight would be added to its parent element.
c. Label Linkbase- Provides human
readable label names to every element
d. Reference Linkbase- Provides an
authoritative reference to the elements.
e. Definition Linkbase- Defines the
dimensional relationship among the elements in the taxonomy.
f. Formula Linkbase- Defines advanced
and user defined calculations among the elements. Eg. calculation of ratios,
etc.
In the C&I Taxonomy, first five out of the
above-mentioned six linkbases are present as advanced calculations are catered
through the validation tool of the Ministry of Corporate Affairs (MCA).
The major changes in the new C&I Taxonomy
vis-à-vis earlier C&I Taxonomy are as follows:
1. The C&I Taxonomy 2012 is based on the
requirements of Revised Schedule VI to the Companies Act, 1956 whereas the
earlier taxonomy was based on the then prevailing Schedule VI.
2. The new taxonomy has been developed as per the
latest architecture viz. IFRS architecture 2011, whereas the earlier taxonomy
was based in IFRS architecture 2006.
3. Addition of Definition Linkbase and Reference
Linkbase
4. The concept of ‘dimensions’ has been introduced in
the taxonomy as against ‘tuples’. Dimensional concept was not supported by
earlier architecture. Dimensions are used to capture the tabular data which was
earlier captured line by line which made the analyses of data difficult.
5. Requirements of Industry-specific Guidance Notes
viz. Guidance Note on Real Estate and Oil & Gas, and SEBI Employee Stock
Option Scheme and Employee Stock Purchase Scheme guidelines, 1999 have been
included in the new taxonomy which were not present in the earlier taxonomy.
Dimensions
v/s. Tuples
With the use of tuples, a filer could use the elements
as many times as required. Tuples were used in the taxonomy where there could
be multiple information w.r.t the elements viz. in case of details of
signatories to the Board Report, etc. In the figure 1.1 below, it can be seen
that the highlighted element is tuple, and accordingly elements underneath the
tuple can be selected as many times as the number of signatories.
Fig 1.1: Taxonomy View of Tuples in earlier taxonomy
Now, in the new C&I Taxonomy, tuples have been
replaced by typed dimensions (explained
in detail under “Types of Dimensions”) which are used to capture such
information.
Dimensions are used to capture the tabular data in a
presentable manner as against earlier taxonomy which used to capture such data
line by line. Dimensions were not supported by the earlier architecture of the
taxonomy viz. IFRS Taxonomy Architecture 2006. To understand dimensions, you
must be familiar with the following terms:
Table
(also called as Hypercube) is the
collection of dimensions together with the tagged values. Table is the highest level of grouping item in Dimensions. It must
contain at least one “Axis” and at least one “Line Item”. It is used to capture
the tabular data.
Axis is used to create columnar axis in the table with
the help of “members”. Each table must contain at least one “Axis”. However,
table can contain more than one “Axis”. For eg. In the table of “Borrowings”, 3
axes have been used.
Members are the description arranged on the horizontal axis
of the table.
Line
Items are group of the regular elements
which appear in the vertical axis of the table. The values are tagged to the
line item alongwith the applicable members from the table.
Fig 1.2 Tabular
view of Long term trade receivables
Types of Dimensions
1. Explicit Dimensions: In this type of dimensions,
members are explicitly defined under an axis. For eg. In “Notes-Share Capital”,
members are explicitly defined under the “Classes of share capital [Axis]”.
Filer can use only the given number of members.
2. Typed Dimensions: In this type of dimensions,
members are not defined under the axis. It has been left on the part of filers
to create any number of members under the axis as per their specific
requirement. For eg. In the case of signatories to the Board Report, no members
have been defined under the “Directors signing board report [Axis]” thereby
enabling the filer to create any number of members as per their requirement.
Fig: 1.3: Taxonomy View of Typed Dimensions in the new
Taxonomy
In the dimensions, “Members” are defined as columns
and the corresponding line items would appear in the row side to present it in
tabular format. Every line item can be linked with a member and be tagged with
the value.
For instance, there is a figure of Rs. 15,000/- (say)
for depreciation on owned vehicles in the note of tangible assets. For XBRL
tagging purposes, the line item “DepreciationTangibleAssets” need to be tagged
with Rs. 15,000/- alongwith the following members:
a. VehiclesMember
b. OwnedAssetsMember
c. AccumulatedDepreciationAndImpairmentMember
Accordingly, this would be presented as below
In furtherance to this, it was observed that certain
“members” would not be applicable to some of the line items, thus there arises
a need to freeze those “members” for such line items. Accordingly, a new
concept called as “notAll hypercubes” has been introduced in the taxonomy
through which certain “members” would become disable for some of the line items
of that table. For eg. In the table “Classification of borrowings [Table]”, the
line item “Nature of security” has been frozen for the member “Unsecured
borrowings [Member]” as there cannot be any security for the unsecured
borrowings.
Business Rules
Business Rules are built as validation checks in the
“Validation Tool” released by the MCA. The Business Rules mainly comprises of
the following sheets:
1. Specific Rules: All the elements are listed in the
sheet and any rule if applicable on any element is mentioned against the
element. For instance, “Reserves and Surplus” appearing on the face of Balance
Sheet is a mandatory element. Thus a filer has to enter a value against this
element.
The following broad rules are made in this category:
a)
This is a mandatory field- It means the value against the element have to be
tagged. In case, the company does not have such element in its Financial
Statements, it need to fill “0” (in case of monetary element) or N.A. (in case
of text element) against those elements.
b)
Should be greater than or equal to zero- It does not mean that the element is
mandatory to be entered. It means that in case the value is entered, it cannot
be a negative value.
c)
The detailed table is mandatory in case “Yes” is selected for any corresponding
element- It means that in case any element for eg. “Whether CARO is applicable”
is tagged as Yes, the CARO Report has to be tagged in detail in the tabular
format. Similar is the case with “Related Party Transactions”, etc.
2. Generic Rules: These are the general business rules
to be complied with while creating the instance documents (XBRL financial
statements). These are not element specific. For eg. there is one generic rule
which states that “It should be mandatory to enter atleast one child element if
parent element is entered and vice-a-versa”. It implies that this rule has to
be followed throughout the complete tagging process.
3. Applicable ELR (Extended Link Role): This sheet
explains the applicability of all ELRs to the applicable instance documents
viz. ELR [200100] Notes - Share capital is applicable to the instance document
of “Balance Sheet” only and ELR [100200] Statement of profit and loss is
applicable to the instance document of “Profit and Loss” only. In case of ceratin
ELRs, applicable instance document is not mentioned. Thus, such ELRs may be
tagged in both the instance documents viz. Balance Sheet and Profit & Loss.
[Refer the para “Filings with MCA”]
4. Mandatory line items: This sheet enlists the line
items which are mandatory only in case the applicable dimension table is used.
For eg. in case filer uses “Details Of Noncurrent Investments Table”, the
following line items under this table would become mandatory for the members:
a. Type Of Noncurrent Investments
b. Class Of Noncurrent Investments
c. Noncurrent Investments
d. Name Of Body Corporate In Whom Investment Has Been Made
5. Exempt Parent and Child members- Dimensions: There
is a generic business rule which states that “parent member of an axis shall be
mandatory to enter in case value has been entered in any of its child members
and vice versa”. This sheet enlists the exemption from the stated generic
business rule. And on similar footings, there is one sheet “Parent child
exempt-calculation” for the line items/ elements which are not covered under
dimensions.
All the Business Rules must be complied with while
creating the valid instance documents in order to file with the MCA. Only valid
instance documents would get validated through the Validation Tool of the MCA.
After the successful validation, filer needs to pre-scrutinize the instance
documents through the same validation tool wherein the data is validated online
from the information available on the MCA portal viz. CIN, PAN, etc.
Scope and Level
of Tagging
This document explains the level of tagging whether
any information is required to be tagged in detail or only block-text tagging
is required. For eg. in previous year, related party transaction were required
to be tagged in detail whereas Auditors Report and Directors Report were
required as block-text tagging.
For the current year tagging, the scope or level of
tagging would not be changed besides some minor changes like Auditors Report is
now also required to be tagged in detail and certain elements of Directors
Report would also be tagged in detail.
Certification of XBRL Financial Statements
The XBRL Financial Statements were required to be
certified by a practicing professional viz. CA/CS/CMA vide General Circular No:
57/2011 issued by the MCA on 28th July, 2011. Practicing Professional needs to
ensure the correctness, completeness and accuracy of the XBRL Financials
vis-a-vis the financial statements which had been adopted at the Annual General
Meeting of the company.
The certification language has been reproduced below:
“It is hereby certified that I have verified the above
particulars (including attachment(s)) from the audited financial statements of
the Company and that all required attachment(s) have been completely attached to
this form. It is further certified that the attached XBRL document(s) fairly
present, in all material respects, the audited financial statements of the
company, in accordance with the XBRL taxonomy as notified under Companies
(Filing of documents and forms in eXtensible Business Reporting Language)
Rules, 2011.
It is confirmed that the attached XBRL document(s) are
the XBRL converted copy(s) of the duly signed Balance Sheet and all other
documents which are required to be annexed or attached to the Balance Sheet as
required under Section 220 of the Companies Act, 1956.”
Practitioner may refer “Guidance Note on Certification
of XBRL Financial Statements” issued by the Institute of Chartered Accountants
of India for the better understanding of the task of certification and to
ensure a correct certification.
Filings with MCA
As already mentioned, Cost Audit and Cost Compliance
Reports would also be filed with the MCA this year alongwith the Annual
Financial Statements in XBRL mode.
As per MCA mandate the companies are
required to prepare two separate Instance documents for the filing purposes:
1. Balance Sheet Instance Document
2. Profit & Loss A/c Instance
Document
And in case the company is also
preparing the consolidated financial statements then it is required to prepare
four instance documents for filing with the MCA:
1. Balance Sheet Instance Document Standalone
2. Profit & Loss A/c Instance
Document Standalone
3. Balance Sheet Instance Document Consolidated
4. Profit & Loss A/c Instance
Document Consolidated
Similar to previous year, extensions
have not been allowed by the MCA for this year as well. Thus, filer would not
be allowed to create/add any element in the core C&I Taxonomy to meet its
own specific reporting requirements.
But as a step forward, the Institute
of Chartered Accountants of India has constituted a committee for approving
extensions in the core taxonomy itself by releasing new versions of the
taxonomies in regular intervals.
The main objectives of the committee
would be:
1. To add the element in the core
taxonomy itself to cater to the industry requirements so as to make the XBRL
financial statements similar to the financial statements adopted at the Annual
General Meeting.
2. to suggest the suitable element,
in case it is present in the taxonomy itself.
Conclusion
The XBRL Regulatory Tool was employed
for conducting technical scrutiny on XBRL filings made by companies. Three or
more alerts were generated for 738 companies, which have been referred to
RD/ROC for examination. [Refer MCA Monthly Newsletter May 2012]. Now,
the focus of the Ministry of Corporate Affairs would be more on the quality
aspects of the XBRL Financial Statements. It is hoped that professionals are
now poised to welcome the second phase of XBRL Implementation with the hands
wide open.
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