XBRL stands for eXtensible Business Reporting Language. It is a standardised “computer readable” language designed to enhance the electronic communication and analysis of business information. It is the technology that facilitates the electronic tagging or labelling of financial data allowing the data to be identified in terms of standard accounting or tax concepts.
It is mandatory for Irish companies that file with the Large Cases Division of the Revenue Commissioners from October 2013. It has also been adopted by many Government regulators, agencies and companies around the world, including the SEC in the United States, Companies House and HMRC in the United Kingdom. These organisations are currently, or will in the near future, require financial information to be tagged and submitted using XBRL.
iXBRL or 'inline' XBRL, is a more recent version of the language which allows human-friendly presentation of XBRL documents. The report can be viewed like a web page and the XBRL can be extracted if the recipient wants to use the tagged data. iXBRL is the format of XBRL being adopted in the UK and Ireland for tax reporting purposes.
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:
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?
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:
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:
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:
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.
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:
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.
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
T: +353 1 792 6856
John Dunne is a partner in the audit practice and is a member of our private company services team. He specialises in advising family owned and entrepreneurial businesses across a wide range of industries.
John has extensive experience advising individuals and families on diverse issues including accounting for acquisitions/disposals, succession planning/wealth protection and family constitutions.
John is a fellow of the Association of Chartered Certified Accountants.
T: +353 1 792 8573
Richard Day is a partner in the advisory practice and advises clients operating in the technology and telecommunications sectors.
Richard leads the data services team and is a specialist in system and process controls and specialises in financial reporting processes and systems and the effective use of technology including databases, spreadsheets and XBRL.
Richard is a fellow of the Institute of Chartered Accountants in Ireland.