CIPC – iXBRL Mandate That You Should Know!
The South African government has taken the initiative to move from a paper-based reporting system to a structured data reporting system with iXBRL (Inline XBRL). Effective 1st July 2018, the CIPC has mandated companies to file their annual financial statements in a new format, i.e., iXBRL. This new format has replaced the traditional PDF format in which the CIPC annual returns earlier used to be filed. The primary purpose behind the CIPC’s drive to introduce iXBRL was to simplify the financial reporting information electronically for South African-based companies.
Why Has the Reporting Format Changed?
The average number of annual reports received by the CIPC is about 0.4 million per year in the PDF format, and this is just for small businesses.
This humungous volume of financial information can neither be analysed nor scrutinized in an orderly manner to detect any early signs of errors, inconsistencies, or fraud in the manually formulated reports. It became more than necessary for the CIPC to implement structured data reporting in South Africa to enable easier access and analysis of financial data.
Why Change From XBRL to iXBRL?
XBRL is a global standard for exchanging financial information, but the problem with XBRL is that it is only machine-readable. Inline XBRL (iXBRL), on the other hand, is both machine and human-readable. The basic idea for the introduction of this format is to allow filers to retain the original view of the source document when filing an XBRL document.
Is Your Company Eligible to File with the CIPC?
The following companies who have been filing their annual financial statements in the PDF format with the CIPC are now required to file in the inline XBRL format:-
● All public companies
● Private companies (eligible and currently liable to submit financial statements using PDF)
● State-Owned companies
● Non-Profit entities
● Closed Corporations (eligible and currently liable to submit financial statements using PDF)
Apart from these companies, entities also need to check their PI (Public Interest) score to confirm whether they need to file with the CIPC. If you are yet to get started with iXBRL filing, the first thing you need to do is check your PI score.
Filing Requirements for Dormant Companies
The Companies Act, 2008 clearly states that even if the company of corporation is inactive or closed, it is still legally required to file and pay annual returns to the CIPC. Failure to comply with the rules of the Companies Act, 2008, there will be cost implications for late filings. Continuous non-filing can result in the company or corporation being placed into de-registration and, eventually, being finally struck off.
Does this CIPC Mandate Concern Dormant and Closed Corporations?
It certainly does. Since every South Africa based company, including the dormant companies, are required to file annual returns with 30 business days after the date of incorporation, this new mandate is a godsend for such preparers. By digitizing the filing process and introducing iXBRL, the CIPC has made it extremely easy for dormant companies to comply with the filing requirements.
iXBRL – The Way Forward
Since the introduction of this mandate, companies are required to familiarize themselves with all the aspects of the iXBRL program by retaining relevant information on the CIPC website. Considering the benefits of iXBRL, it is definitely the way forward for South African companies.
DataTracks, a leading cloud-based solution provider recognized by the CIPC, offers comprehensive and error-free iXBRL solutions. If you need any assistance meeting the deadlines, converting financial statements into iXBRL, or complying with the CIPC’s new mandate, DataTracks is your one-stop solution. Get in touch with the experts at +27 10 446 9061.