XBRL is an encrypted form of transferring & sharing the business details and complete turnover data with the government department within an XBRL format file. Let us go through all the important frequently asked questions about the XBRL and its return filing.
Q.1 – Explain XBRL
XBRL is a widely acclaimed digital language used for communicating the financial data of the business between the concerned individuals. XBRL format is the proficient and the most secure way adopted by many top companies (public and private) into business reporting. XBRL has a bunch of benefits which makes this language a preferred choice of companies like it is an effective tool for the transfer of information plus is less time consuming and above all gives accurate results. XBRL is adopted as a standard communicating language, involves no license cost and is designed & developed by the non-profit-making international association.
Q.2 – What can XBRL do?
XBRL language is mainly used for reporting the company’s financial data. Apart from that, it can also be used as:
- Making the company’s financial reports (external and internal)
- Transferring business data to legal bodies like tax authorities, central government and banks.
- A tool for filing loan applications and preparing related reports.
- The first choice for government departments while transmitting information to other institutions and banks.
- Authoritative accounting literature – providing a standard way of describing accounting documents provided by authoritative bodies.
Q.3 – What are the advantages of using XBRL?
Advantages of using XBRL:
- The tool is the most efficient way of transferring business and financial information.
- Gives accurate results.
- XBRL language is flexible and can be used to cater to a variety of purposes.
- The first choice for government departments while transmitting information to other institutions and banks.
- All the individuals who are the part of the information supply chain (viewers, prepares and transmitters) can access data at a time.
Q.4 – What is the future scope of XBRL?
XBRL is preparing to set itself as a standard language used for recording, storing and transferring business and financial data in the company. It is the much-desired language throughout the country and is integral for transferring information related to various businesses’ purposes.
Q.5 – XBRL is a venture of?
XBRL was designed and developed by an international non-profit association including some major software companies, public & private groups and financial agencies.
Q.6 – How can a company benefit by using XBRL for reporting its financial statements?
Benefits for a company who is using XBRL as a mode to report its financial data:
- XBRL increases the credibility of financial information.
- It is the standard digital language which is adopted by most of the public and private organizations to report the crucial data
- Financial information exclusively in XBRL format is a demand by many regulators, investors and consumers concerned with the information.
- Proper compliance of financial information in XBRL format will reduce human efforts, save time and give more space in the schedule for other promotional activities in a business.
- If XBRL is adopted fully, the data from different organizations can be gathered very easily and can be assembled quickly for better outcomes in less time.
- A company’s finance department can generate accurate and reliable management reports for publications, tax and other regulatory filings as well as credit reports for lenders.
- Reports can be re-checked and re-edited for accuracy.
Q.7 – How do companies encode financial data into XBRL language?
There are various XBRL softwares available in the market which will facilitate the conversion of normal financial information into XBRL language and export them. These tools allow users to map charts of accounts and other structures to XBRL tags. The accounting records can be extracted in XBRL format means there is no need for an accounting software provider to access XBRL there are third party products that can easily convert the data into XBRL.
Q.8 – From where can I get the software which creates XBRL language?
There are various software providers in the market that design and develop XBRL tools for companies in India. The market is open for one to choose wisely from what suits them and comes under their budget.
Q.9 – Why institutes like ICAI are playing key roles in the XBRL association?
ICAI is looking forward to enhancing the quality, efficiency and aptness of the financial information which will be available to concerned individuals. This is achievable only via XBRL. Institutes like ICAI strongly believe that development and complete adoption of XBRL will bring a change to the businesses (small or large). Accountants or financial departments in a company will get a platform fit into the new digital world, solve business issues and capitalize on opportunities.
Q.10 – Does XBRL have an effect on accounting standards?
XBRL is simply an electronic language used for transferring financial information. XBRL has no concerns with the normal accounting standards. XBRL accurately reflects the information reported under different accounting standards and it does not change them.
Q.11 – Is XBRL effective while comparing the financial statements?
ICAI is looking forward to enhancing the quality, efficiency and aptness of the financial information which will be available to concerned individuals. This is achievable only via XBRL. Institutes like ICAI strongly believe that development and complete adoption of XBRL will bring a change to the businesses (small or large). Accountants or financial departments in a company will get a platform fit into the new digital world, solve business issues and capitalize on opportunities.
You can always file your XBRL return through the help of Gen XBRL return filing software offered by SAG Infotech. The trial version will be active for a few hours and after that, you can go for the full version.