What is XBRL Filing? Do I Need It?

XBRL is an abbreviation of Extensible Business Reporting Language. It is widely used for presenting data which ensures hassle-free analysis, thereby bringing down costs, time and effort of businesses. It ensures paperless reporting and is therefore gaining widespread acceptance across different parts of the world. Here are some of the major reasons why XBRL filing is essential for businesses.

Presence of multi-lingual support

XBRL enables concept definitions to be compiled in numerous languages. The translations of definitions can be done by third parties. Therefore a report can be shared in different languages effortlessly. Businesses make large-scale use of this feature since it ensures automatic opening of reports to various communities.

XBRL can be customized

Flexibility is one of the major plus points of XBRL. It can adapt to the specific requirements of reporting. Any type of unstructured data, which is acquired from multiple formats and sources can be organized through the use of XBRL.

Data consumption and analysis

XBRL who acquire data electronically can automate its handling process and make significant time savings which would otherwise be spent on organization and re-entry of information. The software can immediately authorize the data, detect the mistakes and drawbacks which can be addressed then and there. It will also help in analysis, choose and process data which can be reused.

Users, on the other hand, can be diverted to a higher, more significant aspect of analysis, reporting, review, and decision-making. In this manner, investment analysis can save a significant amount of effort, smoothen selection and comparison of data. Lenders will be able to bring down costs and enhance the speed of their financial dealings with borrowers. Government department and regulators can collect, authorize and access data faultlessly which they have failed to do in the past.

Precision in data collection and reporting

Through XBRL reporting, businesses can automate their data collection process. For instance, data from different departments of a firm using different accounting systems can be assembled in an affordable, cheap manner once the sources of these details are upgraded. After the data is collected in XBRL, various types of reports utilizing subsets of data can be produced effortlessly.

XBRL provides clear definitions

XBRL enables the creation of authoritative definitions known as taxonomies, which captures the meaning of all terms which are included in a business report and the link between them. These taxonomies are created by government agencies, regulators, accounting standard setters etc. to clearly explain the data which has to be reported. XBRL doesn’t restrict the exact kind of information which is explained.

XBRL is all-inclusive

One of the major plus points of XBRL filing is that it can accommodate numerous domains for business reporting. Apart from XBRL financial reporting, it can also be used for performance and operation reporting in a number of cases. Other domains which are covered by XBRL include transaction-based reporting, sustainability reporting, and internal reporting. This is one of the major reasons and regulatory agencies have started using XBRL.

CIPC Mandate XBRL

Qualifying entities are now required by the Companies and Intellectual Property Commission (CIPC) in South Africa to submit financial information, including annual returns, using iXBRL format. With the transition to digital reporting starting on July 1, 2018, the goal is to improve trust and accountability in financial reporting. This sets the stage for additional regulators to embrace XBRL, enhancing information sharing across South Africa.

Exploring the Benefits of XBRL for Various Stakeholders

With the implementation of XBRL by the CIPC in South Africa, there is a possibility of generating a series of advantages for different parties involved. Here’s a breakdown of how various groups can benefit:

Reduced Compliance Burden

If other regulators also adopt this approach, companies may be able to streamline their reporting by submitting a single set of data in XBRL format to meet various requirements. This results in substantial cost and time savings related to compliance.

Investment Analysts

The improved efficiency and accuracy of data collection through XBRL directly benefits investment analysts. Easier data interpretation leads to faster and more informed decision-making.

Financial Reporting

XBRL provides significant benefits in the quality of financial reporting data. With widespread adoption, various possibilities may arise:

Enhanced Comparability: Businesses that utilise the identical XBRL taxonomy (set of tags) will have financial statements that are simpler to compare and comprehend.
Reduced Bias: Standardised XBRL reporting using IASB taxonomies could eliminate bias from reports by ensuring equal prominence for all items.
Enhanced Timeliness: Financial data will be disseminated more effectively in a machine-readable form, ensuring quick access for users to make prompt decisions.

Overall, the transition to XBRL offers a more efficient and transparent financial reporting environment in South Africa.

Does Your Company Need to File Financial Statements in iXBRL Format?

The Companies and Intellectual Property Commission (CIPC) in South Africa requires certain entities to submit their annual financial statements (AFS) electronically using the iXBRL format. But how do you know if your company falls under this requirement?

When is iXBRL Filing Mandatory?

There are several scenarios where filing your AFS in iXBRL format becomes mandatory:

Audited Financials: If your company’s Memorandum of Incorporation (MOI) explicitly states the requirement for audited financial statements, you must submit them in iXBRL format.
Fiduciary Asset Threshold: Private or personal liability companies holding assets in a fiduciary capacity for unrelated parties need to submit iXBRL financials if the total value of these assets exceeds R5 million at any point during the financial year.
Public Interest Score (PIS): The PIS is a metric used by the CIPC to assess the public interest in your company. Companies with a higher PIS are generally considered to have a greater impact on the economy or society. Here’s how the PIS score affects your filing requirement:
- Companies compiling their financials internally (e.g., by owners or financial directors) with a PIS of 100 or more must submit them in iXBRL format.
- Companies using an independent party (e.g., accountant) for financial statement preparation and with a PIS of 350 or more need to file in iXBRL format.

Important Note: Appendix C of the CIPC regulations details on How to calculation of the Public Interest Score.

Conclusion

Meeting CIPC’s iXBRL filing requirements can seem complex, but it doesn’t have to be. DataTracks South Africa offers a comprehensive solution to ensure smooth and efficient electronic filing of your annual financial statements.

With over 19 years of experience in the XBRL industry, serving clients across 26 countries, and a proven track record of processing over 400,000 reports for satisfied customers like you, DataTracks is the trusted partner for your CIPC iXBRL needs.

Whether you choose our user-friendly iXBRL software, DataTracks Rainbow, or leverage our expert iXBRL tagging services, you’ll benefit from:

Accuracy and Efficiency: Minimize errors and ensure timely filing with our reliable solutions.
Reduced Costs: Save time and resources compared to manual filing processes.
Expertise and Support: Benefit from our extensive knowledge and dedicated customer support team.

FAQs

What is XBRL Filing?

XBRL (eXtensible Business Reporting Language) filing is the process of submitting business and financial information in a standardized, machine-readable format. This format allows for easier analysis, comparison, and sharing of financial data across different platforms and regulatory bodies.

What is XBRL Reporting?

XBRL reporting refers to the practice of preparing financial statements and other business reports using the XBRL format. This involves tagging financial data with specific XBRL tags that define the nature of each data item, making the information both human-readable and machine-readable. XBRL reporting improves the accuracy, transparency, and efficiency of financial reporting.

XBRL Mandatory for Which Companies in South Africa?

In South Africa, the Companies and Intellectual Property Commission (CIPC) mandates that certain companies must file their Annual Financial Statements (AFS) in the iXBRL format. This requirement primarily applies to:

Public Companies: Companies listed on the Johannesburg Stock Exchange (JSE).
State-Owned Companies: Companies wholly or partly owned by the government.
Private Companies: Based on their Public Interest (PI) score, which considers factors such as turnover, number of employees, and third-party liabilities.

What are the Steps for Filing AFS with CIPC in XBRL Format?

Prepare the AFS: Ensure your financial statements are ready and correctly tagged in iXBRL format.
Access the CIPC eServices Portal: Register or log in to the portal.
Upload the AFS: Navigate to the AFS submission section and upload your iXBRL document.
Receive Confirmation: Keep the submission confirmation as proof of filing.

Can I Outsource the XBRL Filing Process?

Yes, you can outsource the XBRL filing process to a third-party service provider. Ensure the vendor is reputable and has experience with XBRL filings to guarantee accurate and timely submissions. By choosing DataTracks, you ensure accurate and timely XBRL submissions, backed by over 19+ years of expertise. Trust DataTracks for reliable financial reporting solutions.