XBRL is short for Extensible Business Reporting Language. This is a globally recognized reporting format or electronic language used for reporting financial information in a standardized format to ensure smoother analysis, preparation and communication of business information around the world in one format.
Now as fancy as this sounds, how is this XBRL language important in today’s ever changing technologically driven economy? The answer is that with the introduction of XBRL it essentially changes the way financial reporting is being conducted. This allows electronic communication of financial data in one format which enables users of this data to perform analysis more effectively as data is more readily available in a clear and concise format. This can greatly assist investors, analysts, financial institutions and regulators as they can analyze data much more efficiently if it is in the XBRL format.
The way XBRL works is that it tags important financial data. This tagging process basically allocates a unique identifying tag for each individual item of data (example the net profit before tax line) which is necessary for the file to be created. Once all mandatory information is tagged this is thereafter grouped together and the iXBRL file can be generated for submission.
From 1 July 2018 (Being the effective date) CIPC requires a company’s Annual Financial Statements to be submitted in the iXBRL format. Additionally, this would also potentially impact other entities which require submission of financial data to government related entities, stock exchanges & financial institutions as they would also have to follow this requirement to ensure their financials are in the iXBRL format. Now this may sound more of a regulative requirement for entities, but it is important that we should recognize that this is certainly the way forward for the South African Economy. This will ensure we are equipped with the latest technological tools to ensure we are in line with other global markets. The key objective of the CIPC in implementing & introducing XBRL is to improve overall efficiency & effectiveness of financial reporting and to guide the way forward for other regulators in South Africa to adopt XBRL.
The first step is to ensure your annual financial statements are prepared and finalized. Once this is completed then only can this be translated in an iXBRL ready format after the tagging process is completed.This can be done in several ways:
At Ravenloft all our financial statements are drafted in a software with the functionalities of the XBRL tool embedded and therefore we can perform this process. We are also able to prepare iXBRL files for entities which we do not draft as we are able to obtain XBRL input sheets from our service provider. Our aim is to ensure your business is compliant and reduce your time spent on preparation of financial statements.