The ease of doing business and financial reporting has received a boost with the launch of the Companies and Intellectual Property Commission’s Extensible Business Reporting Language (XBRL).
The launch of the digital financial reporting solution on Tuesday will allow companies to file Annual Financial Statements using XBLR, and the data can be shared across the regulatory spectrum for multiple purposes.
South Africa is among the first countries on the continent to introduce this financial and regulatory reporting technology.
Speaking at the launch, Trade and Industry Minister Dr Rob Davies said while there are many challenges with the Fourth Industrial Revolution, it does offer the possibilities of improving governance.
“Digital financial reporting is introduced via the internationally acknowledged best-practice technology standard. XBRL is for electronic communication of business information and it simplifies the preparation and analysis of data, providing major benefits in the communication of annual financial statements. [It is] a step towards absolute connectivity between all our entities,” said the Minister.
XBRL will align the submission of annual financial statements with that of the global reporting standards for businesses. The programme will also mitigate the administrative burden on businesses when reporting financial information to government for regulatory compliance.
“This system has the capacity to ensure that there is integrity in the financial reporting mechanism to different agencies in government. Furthermore, it supports greater transparency, improves the efficiency of capital markets by assisting analysts, financial and security regulators, business registrars, tax authorities and other users to access the relevant facts,” said Davies.
The essence of the Fourth Industrial Revolution, the Minister said, is about large data management and application, where technologies can be applied in various ways across all forms of production and service.
The Companies and Intellectual Property Commission’s Commissioner, Advocate Rory Voller, said XBRL will assist companies with filing annual financial statements to egress from PDF reporting format, to a structured format.
“By using XBRL, companies and other producers of financial data and business reports can automate the processes of data collection. This will ultimately reduce the burden of multiple submissions by different regulators.
“We are satisfied with the results and believe the system offers users long-term benefits, especially if they integrate it with their back-end systems,” said Voller.
The Companies and Intellectual Property Commission (CIPC), which is an agency of the Department of Trade and Industry, conducted a six-week pilot programme where over 100 companies, listed and unlisted entities, were invited to test the system.
Voller said the CIPC is satisfied with the results of the pilot, adding that the system offers users long-term benefits, especially if they integrate it with their back-end systems.
XBRL use to become mandatory
The XBRL reporting applies to about 100 000 qualifying entities in South Africa.
XBRL simplifies the preparation, analysis and communication of annual financial statements, while ensuring greater transparency in reporting.
The filing of financial statements to the CIPC in XBRL format with the annual returns becomes mandatory from 1 July 2018 for companies meeting the audit threshold.
The registration of companies and intellectual property rights and maintenance thereof are among the functions of the CIPC.