What are the Quality Errors while Filing XBRL in India?
The XBRL mandate by the Ministry of Corporate Affairs (MCA) in India covers many companies. XBRL as a data standard is useful only when error-free (or more realistically, with very low error rates). There is a legal liability attached to the XBRL mandate for the companies and its officers in default for submission of inaccurate or false data in XBRL financial statements. This serves to highlight the importance of good quality XBRL.
The following are some of the common errors that show up very often while converting financial statements into XBRL format for MCA filing:
The mapping between an item on the financial statement with an appropriate taxonomy element is usually very evident. However, this can sometimes become difficult due to certain unique items on the company’s statements or a judgment call.
Sometimes, preparers do not consider that a complete XBRL filing needs to be complete in terms of notes and additional disclosures.
These are usually the easiest to spot because they are calculation errors. Any good software for XBRL conversion will ensure these errors do not happen.
These errors, such as the date format being non-standard, arise from a lack of rigor and are easily avoided when a good software or service vendor is used.
The MCA outlines certain fields to be mandatory. Not tagging these concepts will trigger errors.
Financial information entered for the current year but not for the previous year:
These errors, again, are caused by a lack of care and rigour in the preparation process. For most cases, company line items do not change very often and tagging for various years is often a matter of entering figures.
These are errors that MCAs validation tool, MCA21 (www.mca.gov.in/MCA21/) throws up and need to be dealt with on a case-to-case basis. They are usually just plain business rules and calculation checks carried out by MCA21.These are also the kind of errors that can take considerable amounts of time to rectify without an XBRL expert.
The thread that connects all these types of errors is that they can be avoided with a combination of expertise and care. Good quality XBRL makes it attractive for investors to use and other regulators to start using it, which will lead to cost savings in the long run. Quality is worth investing in.
DataTracks is a global leader in preparation of financial statements in XBRL and iXBRL formats for filing with regulators. DataTracks also provides software (SaaS) and Template solutions for those who want to convert XBRL files. DataTracks prepares more than 12,000 XBRL statements annually for filing with regulators such as SEC in the United States, HMRC in the United Kingdom, Revenue in Ireland and MCA in India. DataTracks provides world-class services with its team of certified accountants experienced in US GAAP, UK GAAP, India GAAP and IFRS.
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