You may be well aware that it is mandatory to submit your Annual Financial Statements (AFS) to CIPC (Companies and Intellectual Property Commission), but what you may not be aware of is, now those AFSs must be converted into XBRL before submitting them. This means you can no longer send them in PDF format like you used to.
Prior to adopting XBRL, CIPC had to manually go through all Financial Statements of over 100 000 companies, which was time consuming. However, from 1 July 2018 CIPC required that all companies submit their AFSs in XBRL format.
What is XBRL?
XBRL stands for eXtensible Business Reporting Language. It is a digitalised way of submitting AFSs that is adopted by over 50 countries. It allows the Department of Trade and Industry to go through AFSs quicker than before, analyse industry trends and pick up duplications immediately.
So, you can no longer only tell CIPC what your turnover is but you need to capture it as well. Also, you may be required to prepare your AFS earlier than before, for instance, say 6 months in advance.
What are the benefits?
The main benefit of using XBRL is that it provides one common reporting to all South African regulators. In addition to that, automating data becomes easier to all current and future users of your AFSs.
According to CIPC Filers Guidelines, some of the benefits of adopting XBRL include:
- Searchability: Data is easily found due to the fact that each item of data is individually tagged with specific descriptions about the item.
- Accuracy: Accuracy is enhanced because data does not have to be recaptured.
- Comparability: The data is easily compared because it is prepared in terms of a standard taxonomy.
- Transparency: Transparency of data is enabled by faster and better access to information, which is built by using
a standard taxonomy. - Efficiency: All of the characteristics described above contribute to significant efficiency improvements.
How financial statements need to be prepared and submitted?
All Financial Statements still need to be prepared in accordance with GRAP (Generally Recognised Accounting Practice), the only change is that it is now mandatory to submit AFSs to CIPC in XBRL format.
In order for Financial Statements to be converted effectively, you will need a tagging software. For example, if you are one of MGT Accounting and Consulting clients, your Financial Statements are sent to a service provider helping us with converting all Financial Statements to XBRL.
Which companies must submit in XBRL?
Needless to say, not all 1.8 million companies registered with CIPC need to submit AFS, but only companies that meet certain requirements.
In terms of section 33 of the Companies Regulation 28, 29 and 30, the following companies must submit their Financial Statements in XBRL:
- Companies whose Memorandum of Incorporation (MOI) requires the auditing of Financial Statements.
- Private or personal liability in the ordinary course of its primary activities, holding assets in fiduciary capacity for people not related to the company. Additionally, assets with the aggregate value of R5 million per year.
- A company that compiles the AFS internally (by its Financial Director or its owner) and that has a Public Interest Score (“PIS”) of 100 or more.
- Private or personal liability company that compiles AFS by an independent party and that has a PIS of 350 or more.
- All state owned entities.
- Non profit organisations.
- Public Companies.
- Close Corporations
Data elements need to be submitted via XBRL
Note that all entities MUST submit their AFSs together with their Annual Returns.
Minimum tagging for AFS will include tagging for all applicable facts. All accounting policies, Director’s Reports, Director’s Responsibility Statements, Independent Auditors/Reviews Reports, Company Secretary Reports, Corporate Governance Reports and Notes.
The following statements need to be submitted:
- Statement of financial position current/non-current; Statement of financial position order of liquidity;
- Statement of comprehensive income, profit or loss by function of expense; by nature of expense; OCI components presented before tax; OCI components present after net tax.
- Statement of cash flows direct and indirect method.
- Statement of changes in net assets available for benefits.
- Notes – Subclassifications of assets liabilities and equities;
- Notes – Analysis of income and expense.
How companies will produce data in XBRL format?
All companies will require software that will be able to tag the required data elements, and export the AFS in XBRL format.
First and foremost, you can do that by following these easy steps:
1. Investigate the possibility that existing vendor software used by your company may already have the function to export data into iXBRL. These may include software such as Accounting Software and Enterprise Resource
Planning (ERP) software, or even Disclosure Management software.
- Obtain the services of Software Service Providers who can help you integrate the XBRL program with your current software.
- Alternatively, obtain a software package that allows tagging data elements against the taxonomy.
- Lastly, outsource the process of converting to a dedicated service provider.
CIPC has an online portal where companies can upload their AFSs in XBRL format and submit them immediately.
When you login as a user, the portal will authenticate you on CIPC eServices where after you will be allowed to upload AFS data files. From there,the portal will validate your uploaded AFSs against the CIPC
taxonomy, and send an automatic notification via e-mail.
In cases where submissions are rejected, the system will send you the exact reasons
for failure, after which you will have to re-submit your AFSs.
Information sources
Information in these guidelines can be referenced from the following sources:
CIPC Guidelines publication
https://en.wikipedia.org/wiki/XBRL
https://www.saica.co.za/TechnicalInformation/CorporateReporting/XBRL/tabid/645/language/en-ZA/Default.aspx
https://www.xbrl.org/the-standard/what/ixbrl/
https://www.workiva.com/blog/what-inline-xbrl-and-how-will-it-affect-you
XBRL Taxonomies
https://www.xbrl.org/the-standard/what/taxonomies
https://www.aicpa.org/interestareas/frc/accountingfinancialreporting/xbrl/pages/howxbrlworks.aspx
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