Companies to use their own XBRL accounting terms from next fiscal year

The government will allow companies to use their own accounting terms in the new reporting format from the next fiscal year, accommodating an industry request that the new rule be relaxed to make data comparison easy for shareholders.

At present, there is a difference in the way a firm’s financial data is presented in the new reporting format, known as Extensible Business Reporting Language (XBRL), and that available to shareholders through the annual report, which makes data comparison and analysis difficult. “Companies will be free to report their financials and stick to their own accounting definitions,” with the relaxation in the rule, companies will be able to retain their balance sheet version of definitions and accounting elements known as ‘extensions’ in the XBRL format.

This implies that the ministry of corporate affairs (MCA) will accept headings used in annual reports that are different from those in the XBRL format, such as ‘sources of funds’. There are several such elements that are part of the XBRL format but not of annual reports. For example, in the new format, the companies must club ‘trade receivables’ and ‘unbilled revenues’ under one head of ‘trade and other receivables’. But these two are added to show gross amount under a single head. Experts say this can also lead to loss of information. “This can be a serious impediment to comparability and analysis,” said Infosys CFO V Balakrishnan. However, the ministry is considering allowing ‘extensions’ only in some segments of the balance sheet, such as revenue or expenditure.

profile image


Leave a Reply

Your email address will not be published. Required fields are marked *

India’s Leading Compliance Software

India’s Leading Compliance Software

Get A Demo Today !

Corporate Law Referencer

Corporate Law Referencer

Corporate Law Referencer

Recent Articles

Recent Legal updates

Recent Gst Updates