Optimise Submission of Audited Financial Statements
More than 120 countries, today, follow the International Financial Reporting Standards. Most of them use organised data with XBRL (Extensible Business Reporting Language) for their financial disclosures. iXBRL or Inline XBRL, an open standard. It allows a single document to provide structured human-readable and machine-readable data.
In 2018, the Companies and Intellectual Property Commission (CIPC) of South Africa highlighted the Commission’s plans for introducing XBRL based reporting. It was initially introduced for 100 largest listed companies in the country.
The CIPC intends to provide a new dimension of effectiveness and transparency in financial services. Thus, it incorporated the XBRL standard. It will help XBRL to automatically check whether the business rules have been adhered or not. This would enhance the regulatory efficiency of the CIPC. Building consolidated data will enable the CIPC to do an in-depth analysis and identify trends.
The South African CIPC announced iXBRL reporting to be compulsory for all companies while submitting Annual Financial Statements (AFSs) from July 2018. It greatly improved the ease of doing business in the country.
The investors still have to submit sign-off of financial statements to CIPC. However, they don’t require to upload signed-off PDF files anymore. The CIPC receives data only in the XBRL format.
Also, the financial statements (signed off) may have to be submitted to the CIPC on request. Therefore, it has to be kept by qualifying companies for seven years. The companies which submitted their financial statements to CIPC in PDF format will now have to submit them with annual returns. The following companies fall into this category:
- Public companies;
- Private companies (qualifying and currently submitting using PDF);
- State-owned companies;
- Non-profit entities;
- Close corporations.
However, many companies have found it difficult to submit their iXBRL CIPC returns. Therefore, early planning is a major step to optimise submissions. Factors like a company’s Personal Interest (PI) Score decide whether an enterprise qualifies for submitting its returns. The PI Score determines the eligibility for filing AFS with the CIPC.
The shifting to XBRL reporting has eliminated duplications and differences in reporting. It provides a common standard of reporting to all regulators in South Africa.
The CIPC aims to optimise submissions of audited financial statements. This could be helpful in 5 ways:
- Improving productivity, effectiveness and standards of financial reporting to the CIPC
- Encouraging other regulators in South Africa to adopt XBRL
- Sharing a common taxonomy
- Enabling quality information exchange amongst regulators
- Allowing investors to make fully informed decisions
iXBRL is enhancing disclosures as human and machine-readable reports improve reporting to a great extent. Therefore, optimising submission of audited financial statements in South Africa will boost the country’s financial efficiency as a whole.