XBRL

In Ireland, all companies that are required under the Companies Act 1963 to prepare accounts will be required to submit their Financial Statements in iXBRL format to Revenue. It will become mandatory for all corporation tax payers to use iXBRL on a phased basis, starting with taxpayers dealt with in the Large Cases Division (LCD) from 1 October 2013.

Revenue is already accepting financial statements in iXBRL via the Revenue on-line service (ROS). All corporation tax payers have the option of uploading their financial statements in iXBRL format.

The following points about the Irish Mandate should be noted:

• The mandate affects any permanent establishment, branch or agency registered for Irish corporation tax.
• It includes companies in liquidation.
• Companies who fulfil the Revenue’s dormancy criteria will be exempt from the iXBRL reporting required.
• Revenue has recently announced an extension to the LCD filing deadline for Section 110 companies. Section 110 companies are now mandated to file under iXBRL on or after 1 May 2014.
• The date for mandate for other corporation tax filers is expected to be announced by Revenue later in 2013.

In the UK, all companies required to file a Corporation Tax return with the HMRC are now required to do so electronically using iXBRL for both the tax return and the related statutory financial statements. The requirement took effect from 1 April 2011 and affects over 1.6 million companies.

In the US, the SEC now requires all filers, including Foreign Private Issuers, to submit their financial statements using XBRL. The financial information required to be tagged and submitted to the SEC includes the face of the financial statements and their associated note disclosures. However as the IFRS taxonomy for FPIs has not been approved, those filing under IFRS are exempt from this requirement for now. Approval of the taxonomy is still outstanding.

XBRL reporting is a regulatory-driven change which will require action by management to deliver financial information in a new format using XBRL tags as well as in human-readable form. The primary risk is that companies may not take the actions necessary to be able to continue to deliver company tax returns acceptable to the tax authorities. Secondary risks arise connected with the quality of the application of the XBRL tags and the potential for the XBRL tagging process to identify errors in completed statutory financial statements.

What do management need to consider for iXBRL?

• Who has responsibility for iXBRL implementation?
• Has someone been identified to devote time to assessing the implementation choices, making a recommendation and devising a plan?
• When will a proposed plan and budget be reviewed by the audit committee or senior management?
• How many financial statements need to be tagged and what is the current process for preparing financial statements? Is there more than one process being followed in the organisation?
• To what extent is existing software used in the production of company financial statements iXBRL enabled?
• Who will conduct the work to tag financial information in the financial statements?
• How will any judgements necessary in the tagging of the financial information be identified, considered and resolved?
• What processes and controls over the use of iXBRL should be introduced?
• What level of testing of the iXBRL tagging will be appropriate?
• How might the iXBRL tagging of tax returns and company financial statements be harnessed to deliver benefits in the quality of information provided to management?

The electronic filing and use of iXBRL will be mandatory and unless companies take action to implement iXBRL they will not be in a position to file Corporation Tax returns when the rule is enacted.

XBRL tagging is a matching process:

• Performed by people.
• Using software.
• With a measure of skill and judgement.

The practical challenge to companies required to report financial statements in iXBRL is to implement a method to match financial statement disclosures to the predefined tags and capture those ‘matches’ electronically, whilst applying appropriate controls to the process.

There are three main options available to you for producing financial statements in iXBRL format:

• Outsourced tagging service

  This involves outsourcing the iXBRL process to a third party service provider. We’ve been providing this service to Irish companies with UK reporting entities for over two years. It’s relatively cost effective for clients with a small number of financial statements. Our managed tagging service:

  • Generates output you need and in a format you can readily review.
  • Applies two levels of quality review.
  • Explains the judgments made in selecting the tags.
  • Saves you the time and cost involved in buying and implementing new software.

  Every set of iXBRL financial statements tagged by our managed tagging service will be tested successfully on Revenue’s or HMRCs test site before you receive the deliverables.

  Further information available here.

• In-house tagging

  This involves companies implementing software that will take their final signed accounts, typically in MSWord or Excel and converting these financial statements to iXBRL using a combination of predictive/manual tagging software to apply the tags and convert the financial statements to iXBRL.

  PwC’s new iXBRL Handover service offers a route which enables clients to bring iXBRL tagging in-house with the help of PwC’s expertise. For organisations that have eight or more financial statements to tag, this service has three key benefits as follows:

  • Saves cost by taking work in-house.
  • Maintains your existing process for preparing financial statements.
  • Additional support is available to you on an ad hoc basis.

  For those with fewer than eight financial statements, a fully outsourced service may be a better fit.

  How does PwC’s iXBRL handover service work?
  You license CCH iXBRL review and tag software. We tag some of your financial statements. One of our team will meet and advise you on the set-up, review and tagging of your financial statements. We’ll spend a day with you to make sure you have the skills, know-how and confidence to complete the tagging of all your remaining financial statements, using our tagged financial statements as a guide. Further support is available on an ad hoc basis.

  Further information available here.

• Built-in tagging
  For some companies, a bolt-on tagging solution represents a short-term solution to achieve regulatory compliance for the first years of the filing requirements. Instead you might want to explore how iXBRL tagging might become part of a more systematic process for financial statements preparation in future years. This can be achieved using accounts production software or an embedded process solution.

  Accounts production software effectively maps each company’s trial balance into a pre-tagged accounts structure so at the time of printing off the final financial statements for signature, the software can also produce an XBRL version at the click of a button. This method completely replaces any typing of financial statements in Word. If your organisation has more than a small number of companies, this option is likely to be the most cost effective in the medium to longer term.

  Embedded process solution involves automatically tagging the financial data at the source in the ERP/accounting system. We can support you in selecting and implementing this software and in changing the financial close and reporting processes.

  Other ways we can help

  • Provide advice and support in selecting and implementing software. We can offer you a range of assistance in selecting software through our knowledge and contacts with many of the leading providers of accounts production and conversion software.
    • You may want a single meeting to explain the options available and which vendors might fit your requirements.
    • You may want a more in-depth service, for example, agreeing selection criteria reviewing available products against those pre-determined criteria to provide a short-list.
    • You may want us to accompany you at vendor demonstrations.
  • Provide advice and support in changing the financial close and reporting processes. We can:
    • Assess and provide recommendations on your process and controls over the financial reporting process and integration of iXBRL to support the establishment of a comprehensive, controls based process for the filing process addressing, taxonomy management, instance creation, and review and submission to the Irish Revenue/HMRC.
    • Provide support through the implementation of a built-in or ‘Disclosure Management’ application. Support can include: project management, process and control recommendations and optimisation, embedding of quality procedures or mapping of financial statements into application/tool selected.
  • Performing an agreed-upon-procedures review of the tagged financials. Procedures may include:
    • Test of the accuracy and existence of all iXBRL tags applied.
    • Test the completeness of the iXBRL tags applied .
    • Test of the validity of the iXBRL file produced.