XBRL – Filling the Gaps in Financial Reporting

With the extensive use of the digital space, Malaysian companies expect to benefit from their inevitable movement toward digital reporting. Transitioning from submitting AFS via print or on the counter to submitting them online, digital reports in XBRL format have become the future for Malaysian-based companies. SSM, the Companies Commission of Malaysia in 2018, introduced its new online digital reporting and submission portal for XBRL financial reporting.

According to an Accountant Today article, the aim of launching MBRS was to add value to the financial reporting process by improving information exchange, accessibility, and the quality of preparing annual returns and financial statements.

Source: https://www.at-mia.my/2021/08/23/xbrl-adoption-in-malaysia-a-way-forward-for-smps/

XBRL does not change what is to be reported; it only changes how the data is reported. Due to the ease in financial reporting and submission of error-free reports, organisations and regulators are making every effort for a smooth XBRL transition. The objectives of implementing XBRL in Malaysia include:-

• Communicate information effectively between companies and other information users like regulators, investors, and auditors.
• To promote electronic business reporting via a standard digital format.
• To present both machine and human-readable financial data.

You may wonder how XBRL can benefit businesses in their financial reporting. Let’s find out.

Benefits of XBRL Filing in Financial Reporting

• Streamlined Process for Reporting Financial Information

The preparation of financial reports can be an extremely daunting process, especially when you have a lot of edits and stringent deadlines. This is where XBRL reporting can come in handy. Changes made in one document can also be reflected in other documents, making the process smooth and streamlined.

• Fewer Efforts and Better Data Analysis With XBRL

Users of XBRL can automate its handling and analysis, resulting in reduced time spent on the manual entry of information. The human effort mostly spent on manually compiling data in paper-based financial reporting can now be used for higher review, analysis, and decision-making.

• XBRL Filing is Flexible

XBRL being flexible and extensible can be adapted to various applications. Companies using the XBRL format can define new tags to extend current taxonomies or create their own taxonomies to cater to their specific requirements.

• XBRL Offers Transparency

XBRL reporting can benefit the organisation by improving its investor relations and access to capital markets. How? By increasing the transparency of financial information to the stakeholders, investors can easily compare details of the companies that provide their financial information in a standard reporting format. This helps investors make quick investment decisions.

• More Economical for Companies

Filing annual financial statements with SSM involves a lot of cost and hassle. However, XBRL filing, with its scalable and streamlined processes, reduces the total costs. In addition, you can ensure error-free reporting by outsourcing your financial reporting to a trusted XBRL service provider.

XBRL Adoption in Malaysia

With the rise of eXtensible Business Reporting Language (XBRL), financial reporting has taken a major step forward in improving transparency, accuracy, and efficiency worldwide. Malaysia has realised the potential of XBRL in transforming financial data management and has initiated a strategic project with the creation of the Malaysian Business Reporting System (MBRS). This cutting-edge platform is designed to meet the complex requirements and structure of XBRL, establishing a new benchmark in XBRL financial reporting in the region.

The MBRS is a clear indication of the forward progress Malaysia is achieving in XBRL reporting. Utilising the XBRL framework streamlines the process for companies when preparing their annual returns (AR) and financial statements (FS). MBRS is designed to revolutionise the conventional, labor-intensive registration and management processes into a seamless, digitalized workflow. This transition enhances efficiency and reduces the margin for error, guaranteeing reliable and precise financial data presentation.

Key Challenges for SMPs in Adopting XBRL in Malaysia

Restricted Accounting Tools and Software

As Malaysia continues to navigate through the early stages of XBRL adoption via the Malaysian Business Reporting System (MBRS), Small and Medium Practices (SMPs) encounter specific hurdles that underscore the nascent nature of this transition. One of the primary concerns is the Limited Accounting Tools and Software available that are compatible with the XBRL format. Given that the MBRS implementation has been in place for only two years, SMPs have found their options restricted, primarily resorting to using corporate secretarial software. This software, while beneficial for other aspects of corporate management, often falls short in efficiently embedding the XBRL taxonomy. The crux of the issue lies in the seamless preparation of the XBRL instant document—a process that is crucial for the accurate and efficient reporting of financial data.

Limited Resource Capability

Addressing the challenge of limited resource capability among Small and Medium Practices (SMPs) in Malaysia, especially in terms of local expertise in XBRL, is crucial for a successful transition to the Malaysian Business Reporting System (MBRS). The gap in knowledge and expertise concerning the use of the mTool for preparing annual returns (AR) and financial statements (FS) poses significant challenges. Additionally, concerns about the adequacy of corporate secretaries’ and owners’ understanding of FS submission through XBRL and the time-intensive process of preparing the XBRL instant document further complicate matters.

Solution: Enhancing XBRL Competency with DataTracks’ Dedicated XBRL Solutions Demo

To tackle the significant challenges Small and Medium Practices (SMPs) face with XBRL financial statements preparation, DataTracks offers an essential solution by combining specialized tools and deep expertise. Boasting over 19+ years of experience in XBRL services, Our highly skilled team excels in transforming financial statements into XBRL format, ensuring accuracy and superior quality. Moreover, We provides an interactive XBRL demo by our dedicated XBRL experts, giving SMPs a hands-on experience with our tools and showcasing the ease with which they can generate XBRL financial documents. This XBRL demo acts as a crucial learning resource, helping to demystify the process of XBRL reporting and equipping SMPs with the confidence and understanding needed to adopt XBRL seamlessly.

Make Your Way Towards Error-Free XBRL Filing TODAY!

Financial reporting can become a daunting process very quickly. Therefore, make your transition to XBRL TODAY to avoid any hassles. By partnering with DataTracks, you can ensure error-free preparation and submission of your AFS in the XBRL format. With an experience of 200,000+ compliance reports for 19,900+ clients globally, DataTracks can be your best pick for a smooth transition to XBRL.

To know more about the XBRL services offered by DataTracks, speak to an MBRS expert @ +60-392-126-125 or email at enquiry@datatracks.my.