Will digital reporting be the future of financial submissions?
XBRL (eXtensible Business Reporting Language) has been a standard format for compliance reporting in the past decade. XBRL is an open international standard for digital business reporting. Anyone can use this language to collect the exact data they want unambiguously. Its functionality is similar to QR codes, telling you exactly what data is available in a report. In addition, they are tagged with specific taxonomies to provide information about how this data comes together for a particular operation or financial insight.
In India, the MCA regulates compliance reporting, which is submitted by stakeholders and investors digitally.
Can digitalization transform accounting and financial services?
Digitalization is the buzzword of our time. It entails representing data and other information in digital formats when previously held in physical forms, making such valuable information available to staff, partners, and other stakeholders within and outside an organization in digital formats.
In India, all the active companies who qualify submit their returns in XBRL format to MCA. There are about 1.3 million companies in India that actively maintain their accounts and furnishing the returns.
In a recent suggestion given by the former Finance Secretary of India, all the active companies should digitalize their financial reporting.
Significant tasks involved for transforming in digital mode:
There are two essential steps involved if Indian companies completely change accounting, auditing, and financial reporting in a digital manner:
- Like the GST mandate that paved the way for the online generation of invoices, all the active 1.3 million Indian companies should mandate their accounting and financial reporting to a digital format which would require outlawing manual accounts after specific timelines.
- The digital standard should be made compulsory and should be applicable for the company’s audit, thereby making the regulatory reports in a fully automated program mode.
While SEBI has a major role to play in making listed companies shift to digital accounting and financial reporting, the real implementations will be required from the MCA and ICAI since they are in charge of accounting, auditing, and financial reporting standards and have control over all companies, listed or unlisted.
Digitalisation will provide a better environment for our economy, facilitate more transparency for all shareholders and will also help in immediate identification of fraud related to compliance, early tracking of fraud. Undoubtedly, digital reporting will play a significant role in the future of financial submissions.
About DataTracks XBRL Conversion Specialist:
DataTracks is a leading provider in software & services to prepare compliance reports in 26 countries and more than 19,400 clients. If you seek any assistance with your XBRL needs, please drop a line at firstname.lastname@example.org, and our team shall get in touch with you for understanding your compliance reporting requirements. You can also connect with us on call at +91 44 4208 1719.