NEW DELHI: After being successfully introduced last year, the new financial reporting format, XBRL, is now being adopted by many mutual fund companies to enhance corporate governance as well as to improve risk management and control. Moreover, it is being done completely voluntarily with no diktat for mutual fund companies from the government on XBRL implementation.

“SEBI had shown interest in adopting XBRL format for fund houses though no timeline had been set. We decided to move into it early as availability of standardized data is much needed by fund houses like ours.

In the long run, this will automate information availability across regulators, funds, subsidiaries and investors,” explained Raghunath Reddy, Vice President, IT, UTI mutual funds which will file its returns in the new format by the end of this month.

Other major mutual fund companies such as DSP BlackRock, HDFC, ICICI, SBI and LIC Nomura among others started filing their financials starting this year.

XBRL (eXtensible business reporting language) is a global standard for easy exchange of business information between different government departments and regulators.

“Each regulator has it own format in which information is filed leading to a mismatch. XBRL allows dissemination of varied data in an uniform format between such regulators which is crucial for accurate and faster data collaboration,” said S. Swaminathan, CEO, Iris Business Services, a popular XBRL service provider.

Under this format, companies report their financial statements using XBRL syntax as an .xml file instead of uploading their balance sheets in .doc or .pdf format.

Uniform filing of returns such as information on deployment of funds, data on balance load account, ageing analysis of asset under management among others allow banks to collate data more easily. This will help not only in keeping funds’ financials in order but also bring in transparency for investors as white-collar crimes in disclosures of statements can be detected early in XBRL.

Moreover, the new financial reporting format will eventually allow investors to view fund details like number of branches, half yearly portfolio disclosures in the language of their choice bringing greater regional outreach especially to tier 2 and 3 cities, something that the banks have been eyeing for a long time.

“Apart from more accurate company disclosures, information on a real time basis as well as easier conversion of data into information and information into insight will enable investors to make an informed choice,” explained Madhusudan Warrier, Vice President, IT, IDFC AMC Limited.

In India, about 8 lakh companies are expected to file their financial statements using XBRL format over the next couple of years.

Source: The Economic Times

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