Purpose and Importance of XBRL

XBRL is the language of electronic communication of business and financial data that transforms business reporting around the world. It offers great benefits in the preparation, analysis and communication of business information. It provides cost savings, high efficiency and improved accuracy and reliability for all those involved in providing or using financial data. XBRL stands for eXtensible Business Reporting Language. This article focuses on the purpose of XBRL.

Meaning of XBRL

XBRL is an international standard for digital business reporting, operated by a global Non-Profit Organization, XBRL International, committed to improving reporting in the public interest. XBRL is used worldwide, in more than 50 countries. Millions of XBRL documents are created every year, instead of old, paper reports with more useful, more efficient, and more accurate digital versions.

In short, XBRL provides a language in which reporting terms can be defined by authorization. Those terms may be used to represent exclusively the contents of financial statements or other forms of compliance, performance and business reports. XBRL allows reporting information to flow between organizations quickly, accurately and digitally. The transition from paper-based reports, PDF and HTML to XBRL is a bit like the transition from film photography to digital photography, or from paper maps to digital maps.

Purpose of XBRL

Commonly referred to as “reporting bar codes”, XBRL makes reporting more accurate and efficient. Allows different tags to be associated with reported facts, allowing:

• People who publish the reports do so with the assurance that the information contained in it may be used and accurately analysed.
• People who use reports to test it against a set of business and sensible rules, to capture and avoid errors in their source.
• People who use the knowledge to do so in a way that best suits their needs, including the use of different languages, other forms of money and the style they prefer.
• People who use the information to do so make sure that the data they are given comply with the set of definitions described earlier.

Complete descriptions and accurate data tag allows to:

• To prepare
• Confirmation
• Publication
• Exchange
• Use
• Analysis

Of business information of all kinds. The information in the reports prepared using the XBRL standard varies between different information systems in completely different organizations. This allows for the exchange of business information throughout the reporting series. People, who want to report information, share information, publish work information and allow for direct processing of information all rely on XBRL.

Importance of XBRL

XBRL is not only important because it has been legalized by many countries, but it has a lot to do with changing the Financial Reporting Fortune.

The following points will emphasize the importance of XBRL –

• It makes business reporting digital, which is why it makes it more transparent.
• It is used for communication between businesses and users of financial information
• Better information, ratings, and general customer performance reviews benefit the bank and customer alike
• The best investment options can be selected with XBRL approval
• XBRL will determine the future of the input, process and output of financial information

Advantages of XBRL

A new saga in the world of accounting has a number of benefits, among others, namely:

• Automation function
• Cost Reduction
• Improved Data Accuracy
• Familiarity with all countries Savings Standards
• Very Reliable and Fast
• Making financial statements more useful
• Easy Data Comparison

XBRL is a versatile language that may be used to cover all elements of reporting in a variety of nations and industries. We may customise it to match unique business demands, even at the level of individual businesses, due to its extensible nature.

Therefore, it can be said that XBRL technology leads to the trade of additional information that can be automated by use. This one-size-fits-all approach ensures the accuracy of all Financial Data for end users and early corporate transaction decisions.

Documents required in XBRL Purposes

The following documents need to be completed in XBRL format:

• Balance Sheet in excel format
• Profit and Loss Statement excel format
• Statement Cash Flow Statement in excel format
• Annual Report on word Files
• Related Group chart
• Last Year’s Chart Properties Sample file / PDF format

XBRL filing procedure for Financial Statements

The method for filing financial statements in XBRL format is as follows:

• Create an XBRL instance
• You may obtain an XBRL validation tool from the MCA webpage.
• Use that tool to verify documents, for example.
• You may also use the tool to perform a preliminary review of a legitimate sample document.
• Link the instance to the AOC-4 XBRL E-Form as well.
• Fill up and submit the E-Form AOC-4 XBRL on the MCA site.

Get Your XBRL Filed through Legal Window. Our Experts will guide you through the entire filing process of XBRL.

Penalties for failing to file XBRL financial statements

If a company fails to file its financial statements with the Registrar by the deadline (i.e. 30 days), it will be fined ten thousand rupees, with an additional penalty of one hundred rupees per day if the delay persists, up to a maximum of two Lakh rupees.

The company’s Managing Director and Chief Financial Officer, if any, and, in the absence of the Managing Director and Chief Financial Officer, any other director charged by the Board with compliance with the provisions of this section, and, in the absence of any such director, all the company’s directors, shall be liable to a penalty of 10,000 Rupees, with a further penalty of 100 Rupees in case of repeated failure.

Conclusion

Joining the XBRL consortium offers a list of business benefits. This focuses on an early understanding of the opportunities offered by XBRL, support for the use of XBRL and the opportunity to gain valuable leadership in delivering XBRL to products and services. The Benefits section provides more information on membership benefits.