One way to understand what something is, to first understand what it is not. Allow me to list ten things that XBRL is not, hopefully making it self-evident as to what XBRL is.
1. XBRL is not a piece of software
Though XBRL is not software, you will need software to create XBRL documents, you will also need software to analyse XBRL documents. The software to create XBRL documents is what is referred to as publishing software. To read XBRL documents one would need a rendering tool.
2. XBRL is not a new accounting concept
XBRL is an information standard, it is not a new accounting concept. It merely is a new way to report the same information in a richer, more meaningful way. It works with existing accounting concepts.
3. XBRL is not expensive
XBRL implementation in India will cost a fraction of the US $ 100,000 (Rs 45 lakh) that listed companies in the USA spend on one year’s XBRL filings to the SEC. I must hasten to add that the cost to listed companies will be more than what it costs unlisted companies. The alternative the listed companies have is to outsource the XBRL conversion to a firm like us and choose to defer the software purchase to the next year.
4. XBRL is not difficult to learn
As the saying goes, XBRL is not rocket science and even rocket science can be learned. It is all just a matter of time. In XBRL service provider firms, fresh recruits have to go through required training in acquiring domain knowledge combined with practical hands on experience using XBRL validation tools which has been developed by MCA. I must caution that a 1 or 2 days XBRL training will be woefully inadequate.
5. XBRL is not just about financial reporting & compliance
While it is true that the first move towards XBRL has been taken by MCA to improve compliance, it would be a shame to stop there. Indeed, every company can use XBRL internally to improve MIS, to improve decision making. It won’t be long before firms can submit loan documents to banks in XBRL. Indeed, wherever information is exchanged, XBRL can be used. From cricket scores to government expenditure tracking, from health records to trade documents, XBRL is finding application everywhere.
6. XBRL is not owned by anybody
This is the single most important reason why XBRL is taking off. It is open source, it is royalty free. Nobody owns the XBRL standard; it has evolved through collaboration between accountants and technologists.
7. XBRL is not just about external reporting
Many mature companies have begun to reap benefits of internal consolidation using XBRL. Yet others have found merit in an integrated XBRL IFRS strategy. The potential benefits of XBRL for internal MIS are huge.
8. XBRL is not going to increase compliance burden
Over at Reserve Bank of India, even with the baby steps they have taken on XBRL, they have reduced the number of forms to be submitted by banks by one fourth. Similar will be the experience once the MCA roll out is through and other agencies start working closely with the MCA. Indeed, moving to XBRL will greatly reduce the compliance burden for the filers. One word of caution though: the burden may be higher in the first year due to transition issues but it will be smooth sailing thereafter.
9. XBRL is not a problem to be dumped on IT
In many companies, the IT department is being roped in for XBRL related decisions. This may not be the right approach. In fact, with an effective XBRL implementation, the role of IT will get greatly reduced, the power will move to the users of information. Hence the right people to take charge would be the Finance & Accounts Department and Planning & Strategy, not IT.
10. XBRL is not something to fear
One has read reports about how with XBRL even the smallest mistakes will be highlighted. On the contrary with XBRL, mistakes will not happen as the filings will get pre-validated. The approach should be to not become a slave but to master it.
How Pratham Consultants can help you?
Pratham Consultants is a specialised corporate advisory firm promoted by young and dynamic professionals in the preparation of financial statements in XBRL formats for filing with regulators. Pratham Consultants prepares more than 1,500 XBRL statements annually for filing with regulators. Pratham Consultants provides world-class services with its team of certified accountants experienced.
To find out more about Pratham Consultants, visit https://prathamconsult.com/bak-main or send an email to email@example.com/bak-main / firstname.lastname@example.org or call (+91) 8866177144 / 8866277244.