XBRL in Inuia: Challenges to a Bigitizeu

Futuie
By CA ChunJun 0oyul, ceo, Blue Conxultlng Pvt. ItJ.

now less Lhan 30 days away from Lhe MCAs mandaLed flllng of buslness lnformaLlon Lhe
knowledge ls beglnnlng Lo dawn on companles and flnance and accounLlng professlonals LhaL Lhere
ls probably more Lo x88L flllng Lhan slmply uslng sofLware Awareness and undersLandlng of Lhe
baslcs of x88L ls sLlll noL wldespread even among Lhe 30000 odd companles LhaL are requlred Lo
flle by november 31 2011
ln Lhls arLlcle we hlghllghL some unresolved lssues and challenges LhaL have been accenLuaLed over
Lhe recenL pasL
8efore we look aL Lhe lssues lL ls worLh lL Lo repeaL a few polnLs
Wby tbe interest in XBRL?
x88L ls a flnanclal reporLlng language used for elecLronlc communlcaLlon of buslness and flnanclal
daLa whlch ls revoluLlonlzlng buslness reporLlng around Lhe world lL provldes ma[or beneflLs ln Lhe
preparaLlon analysls and communlcaLlon of buslness lnformaLlon aparL from cosL savlngs greaLer
efflclency and lmproved accuracy and rellablllLy Lo all Lhose lnvolved ln supplylng or uslng flnanclal
daLa x88L sLands for exLenslble 8uslness 8eporLlng
1he reporLlng process ln mosL cases ls a complex cumbersome one requlrlng companles Lo collaLe
check valldaLe and reconclle slgnlflcanL volumes of daLa Lo arrlve aL a reporLlng package More
ofLen Lhan noL desplLe efforLs Lo ensure accuraLe lnformaLlon Lhe rlsk of error sLlll remalns hlgh
lnformaLlon sysLems ln mosL large organlsaLlons have developed ln spurLs drlven by lmmedlaLe Lo
shorL Lerm needs and ofLen compllcaLed by acqulslLlons and geographlcal spread uaLa ls ofLen
malnLalned ln dlverse sources/appllcaLlons and Lhe resulLlng complexlLy ofLen creaLes a challenge ln
Lhe closure of accounLs varylng reporLlng requlremenLs formaLs and markeL expecLaLlons on Lhe
Llmlng of declaraLlon of resulLs also add Lo Lhe challenge
1oday perhaps more Lhan ever before Lhere ls an lncreased awareness of Lhe relevance and
economlcs of lnformaLlon Lach year organlsaLlons Lhe world over devoLe conslderable efforLs Lo
reporLlng be lL lnLernal or exLernal
Mlshaps ln corporaLe governance and hlgh lnvesLor expecLaLlons and Lhelr prlme coverage by news
medla have also seen regulaLors seeklng more and more lnformaLlon from companles 1he challenge
for Lhese agencles has been Lo slfL Lhrough Lhe deluge of reporLs and underLake meanlngful analysls
Lo enable a Llmely effecLlve follow Lhrough 1he quesL for a soluLlon ln Lhls regard has seen Lhe
emergence of varlous Lechnology plaLforms and appllcaLlons ln recenL Llmes exLenslble 8uslness
8eporLlng Language (x88L) has emerged as a popular effecLlve alLernaLlve for effecLlve reporLlng
and analysls
A deeper vlew of Lhe converslon process and some challenges are avallable ln an arLlcle LlLled
lndla Cn Lhe 8oad Lo x88LLnabled llnanclal 8eporLlng whlch appeared ln Lhe ueepawall lssue of
Lhe nl8C newsleLLer volume xxxx no 9 publlshed CcLober 2011)
be Benefits of XBRL
8ecause aL presenL x88L ls seen as a regulaLordrlven lnlLlaLlve lL ls posslble LhaL full awareness
and aLLenLlon has noL yeL been absorbed by Lhe lA professlonals and companles
ln brlef Lhe x88L framework provldes a plaLform for people parLlcularly flnance professlonals Lo
access documenLs and Lransfer or reporL lnformaLlon elecLronlcally Some advanLages of x88L
lnclude
n|gh accuracy Analysls and exchange of corporaLe flnanclal lnformaLlon ls rellable because Lhe
compuLers access daLa dlrecLly Slnce daLa does noL need Lo be reenLered Lhe posslblllLy of error ls
greaLly reduced
8etter data management x88L allows for sysLemaLlc managemenL of daLa lnformaLlon can be
monlLored ln almosL real Llme enhanclng valldaLlon
1|mesav|ng lnformaLlon can be accessed and collecLed from any polnL and across Lhe globe wlLh
relaLlve ease lor example regulaLory reporLs can be flled easlly resulLlng ln hlgh producLlvlLy
Data keuse x88LLagged reporLs can be shared and used boLh wlLhln organlzaLlons and by mulLlple
exLernal organlzaLlons slnce lL ls plaLform neuLral 1hls process ls repllcable AppllcaLlons can Lake
advanLage of Lhe expllclL naLure of x88L Lags Lo process lnformaLlon auLomaLlcally for furLher
reporLlng and analysls
Data Va||dat|on x88L Lagged reporLs can be valldaLed for conslsLency and lnLerrelaLlonshlps
beLween varlous daLa elemenLs
Document readab|||ty x88L Laxonomles enable Lhe compuLer Lo read any documenL lor example lf
Lhe user ls uslng say MaraLhl he can collecL and reassemble daLa from documenLs wrlLLen say ln
Plndl or 1amll lf Lhey are x88LLagged
1ransparency x88L allows for lncreased Lransparency of flnanclal lnformaLlon Lo sLakeholders aL a
granular level lor example companles reporLlng under a common Laxonomy provlde speclflc deLalls
LhaL are lmmedlaLely comparable by lnvesLors and analysLs ln lnvesLmenL declslon maklng
ome Brief Points for CFUs and Utber Implementers
1he lmporLance of Lhe x88L lnlLlaLlve should noL be underesLlmaLed by Lhe lmplemenLers Close
aLLenLlon needs Lo be glven Lo Lhe followlng polnLs
How is tagging done?
O lor Lagglng one need Lo have a good knowledge of llnanclal SLaLemenLs (le Schedule vl
and AccounLlng SLandards) and famlllarlLy wlLh Laxonomy and lLs relaLed concepLs
O MosL sofLware comes can lmporL llnanclal SLaLemenLs ln Lxcel and Word formaL Lo sLarL Lhe
Lagglng process
O 1yplcally on one slde Lhere are llnanclal SLaLemenLs and on Lhe oLher slde elemenLs (Lags)
are dlsplayed Cne needs Lo choose an approprlaLe Lag and conLlnue Lagglng Lhe enLlre
llnanclal SLaLemenLs
O A deLalled vlew of Laxonomy ls avallable here blgfooLcoreflllngcom
Professional Process
1he converslon process lLself ls much more Lhan [usL Lhe selecLlon and deploymenL of good
sofLware 1haL ls a small parL of Lhe efforL When companles ln Lhe uS began Lo lmplemenL Lhe x88L
process on a volunLary basls Lhey found LhaL lL could Lake up Lo slx monLhs Lo process Lhe flrsL
lnsLance documenLs (as reporLed by reporL by Lhe Aberdeen Croup ooblloq compllooce ooJ
8osloess lmptovemeots 1btooqb \8kl) 1here ls a long learnlng curve before x88L can be
lmplemenLed on an endLoend basls
1he process lLself requlres professlonal knowledge of flnanclal reporLlng experlence of lmplemenLlng
Lhls knowledge aL a pracLlcal level Where Lhe x88L process ls belng ouLsourced Lhe consulLanL
would need Lo have experlence across dlfferenL verLlcals


aidelines: Professional Fees
O 9rofesslonal x88L converslon fees are based on Lhe Llme spenL on Lhe converslon process
1hls varles across dlfferenL cllenLs because of Lhe volume of daLa and level of complexlLy ln
llnanclal SLaLemenLs
O 1he Lagglng efforL ln Lhe case of Lwo companles wlLh a slmllar number of pages ln Lhelr
Annual 8eporL can vary as drasLlcally as from 30 Lo 100
O 1he professlonal fee for x88L converslon ls normally based on Lhe followlng facLors
4 no of pages ln Lhe annual reporL
4 no of subsldlarles of Lhe company
4 volume of relaLed parLy LransacLlons
4 Level of complexlLy ln Lhe llnanclal SLaLemenLs

aidelines: ervice Provider election
per|ence
O Ask servlce provlders abouL Lhelr experlence ln handllng llnanclal SLaLemenLs across varlous
lndusLrles
O Ask abouL Lhe number of years ln exlsLence LoLal Leam slze 1he naLure of servlces provlded
by Lhe servlce provlder can be a good lndlcaLlon of lLs knowledge of llnanclal SLaLemenLs
O8kL convers|on process
O Ask Lhe servlce provlder abouL lLs x88L converslon process WhaL lnpuLs shall be requlred
from Lhe cllenL and aL whaL sLages?
O 1he amounL of addlLlonal lnformaLlon requlred for accuraLe converslon and flllng varles from
company Lo company lL could lnclude lnformaLlon oLher Lhan LhaL provlded ln Lhe Annual
8eporL
O8kL 1eam
Lnqulre abouL Lhe followlng from a prospecLlve servlce provlder
O no of people ln x88L Leam
O 1helr quallflcaLlons
O uo Lhey have prlor experlence on Lhe x88L converslon process
O ls Lhere a separaLe Leam or person for revlew of Lagglng quallLy?
1hls lnformaLlon wlll help you Lo assess wheLher a parLlcular servlce provlder can handle volumes or
noL
||ent references
OAsk abouL Lhe servlce provlders exlsLlng cllenL llsL
OAsk for aL leasL Lwo reference for whom Lhe servlce provlder has converLed flnanclal
reporLs lnLo x88L Cne phone call can provlde you an assurance abouL Lhe compeLence and
quallLy of an x88L servlce provlder
onf|dent|a||ty of |nformat|on
OA cllenL should enqulre abouL Lhe daLa handllng process aL servlce Lhe provlders offlce
Ouoes Lhe servlce provlder have a pollcy of slgnlng a confldenLlallLy agreemenL or an nuA
(nondlsclosure agreemenL)?
ome Points to Ponder
As we conLlnue Lo bulld Lhe foundaLlon of a dlglLlzed fuLure Lhere are a few polnLs Lo asslmllaLe and
Lake lnLo conslderaLlon as Lhey could delay Lhe advenL of Lrue 21
sL
cenLury lndla
O1o converL llnanclal SLaLemenLs ln x88L formaL one needs Lo have a professlonal
undersLandlng of llnanclal SLaLemenLs and 8uslness 8ules deflned for 1axonomy SofLware ls
ost oo eooblet lL cannoL replace or repllcaLe domaln knowledge
O9resenLly Lhere ls no sofLware avallable ln Lhe markeL whlch can Lag auLomaLlcally
Ox88L sofLware prlces range from 8s 3400 Lo 8s 400000
OSlmllarly converslon fees range from 8s 9000 per company Lo 8s 43000 per company
and 8s 300 per page Lo 8s 3000 per page
O9resenLly Lhere ls noL much dlfference ln Lhe efforL lnvolved ln Lagglng a llsLed company
and an unllsLed company
Resoarces
Oebxltex
OMinistry of Corporate Affairs
Ohttp://www.mca.gov.in/
O%e Institute of Cartered Accountants of India
Ohttp://www.xbrl.icai.org/
O# International
Ohttp://www.xbrl.org/
O# India (# India is te Indian 1urisdiction of # International)
Ohttp://www2.xbrl.org/in/
OBookx
O# for Dummies - by Charles Hoffman
Oinancial #eporting Using # - by Charles Hoffman
OICAI Publication on # - A Primer
Chandan is a dynamic and experienced proIessional in the Iield oI Finance and Taxation. In
the past, he headed the Iinance Iunction oI a joint venture oI a Fortune 500 company which
has pan India operations. He was instrumental in streamlining important Finance & Accounts
('F&A') processes, especially EVA reporting. Key job responsibilities included International
& Domestic taxation issues, Treasury Management, and presentation beIore Audit Committee
oI the Company.

In his quest to provide excellent and value added F&A services, Chandan co-Iounded Blue
Consulting Private Limited.
You can contact Chandan here: .handanblue.onsulting..o.in