The information age we are living in has drastically changed our lives. Many of us were born in a time when the Internet, smartphones and social media were unimaginable. The speed of development and benefits of technology had surpassed the imagination of all who lived before the change of the century. In the same way, digital financial reporting is revolutionising the business world. This is how the CIPC envisages that technology can be used to the eventual benefit of all in South Africa.
The Companies and Intellectual Property Commission of South Africa (CIPC) has launched a programme in 2016 to introduce digital financial reporting via the technology standard of eXtensible Business Reporting Language (XBRL). The scope of XBRL applies to the submission of audited or independently reviewed annual financial statements (AFSs) by a sub-set of around 100 000 qualifying entities out of a total of around 1,8 million entities registered with the CIPC.
The commission has mandated submission of AFSs for qualifying entities via XBRL as from 1 July 2018 and a notice in this regard has been published on the CIPC website.
Reasons for XBRL
XBRL as technology standard for reporting is gaining momentum worldwide. It has been proven in various countries that the benefits of XBRL outweigh the status quo of legacy mechanisms of reporting for both filers and consumers of financial or business data.
In the case of the CIPC, the following were main drivers for change:
Improved efficiency for dealing with high volumes of reports − manual analysis of large numbers of AFSs will be replaced by automated analysis and validation of reporting criteria.
Improved regulatory effectiveness − analysis on consolidated statements per industry via business intelligence (BI) technology will replace the limitations of manual sample analysis on individual statements only. XBRL therefore enables improved ‘big picture’ insight into businesses in South Africa.
By implementing XBRL, the CIPC paves the way for eventual standard business reporting (SBR) in South Africa where various regulators can share data − the principle of ‘report-once-share-many’. This will eliminate the need for businesses to report different formats of financial statements to multiple regulators.
Potential data-sharing with private investment companies will assist with better investment advice and decision-making. Sharing data with other government agencies can even be used for economic policy formulation. The economy as a whole can therefore be impacted in a positive way.
Best-practice standards
The CIPC’s reporting requirements via XBRL will be based on the International Financial Reporting Standard (IFRS) pertaining to the format of AFSs. Best-practice standards, both from an accounting and technology perspective, will therefore be combined.
Progress of the programme
The programme is currently in the development phase of the technical reporting platform. This will entail a web portal on the CIPCs website for uploading of XBRL data files. Progress is on track according to planned timelines and deliverables.
Client-side software
Every reporting entity will be required to have XBRL-capable software in place for compiling of AFS data in XBRL format, according to the CIPC’s published taxonomy.
To assist reporting entities in their efforts to obtain client-side software, the CIPC has established a software service provider (SSP) panel. A number of SSPs have been assessed in terms of the software solutions and services they can provide to reporting entities to ensure minimum compliance to the CIPC’s technical XBRL requirements.
A list of recommended SSPs has been published on the CIPC’s website. Reporting entities are encouraged to engage with the recommended SSPs for information on the various solutions, services and license/costing options offered by them.
Minimum requirements
A number of business-related documents have been published on the CIPC’s website (for example Frequently Asked Questions and Filers Guidelines) aimed at explaining various aspects and requirements of the programme. Technical documents and the prescribed taxonomy are also published on the CIPC website (www.cipc.co.za) under the ‘XBRL Programme’ menu.
These documents include, but is not limited to:
- The entities required to comply to the XBRL mechanism of submission
- The exact reporting requirements in terms of statements, disclosures, mandatory data elements and validation rules
- Technical requirements (for example the prescribed taxonomy and relevant tagging rules when using the taxonomy)
Pilot testing and roll-out
The CIPC selected and notified around 100 top JSE-listed companies to be part of a pilot test phase starting in February 2018. The purpose of pilot testing is to test functionality of both the CIPC’s portal for uploading of AFSs via XBRL and the client-side software used by the companies for producing AFSs in XBRL format.
Pilot companies can use any valid set of statements of any previous year, because submissions during the pilot phase will only be used for testing and will be discarded from the CIPC system before live roll-out of XBRL.
The CIPC published a list of pilot companies on the website. Companies not part of the official list are welcome to participate on a voluntary basis.
As from 1 July 2018, all qualifying entities will be required to submit their latest available approved/audited statements on the first date of submission applicable to them. The first date for XBRL submission for every entity is determined by the anniversary date of their date of incorporation. The calculation of the first date of submission of a particular entity is different for close corporations and companies. The exact regulations that apply to every entity to calculate their particular first date of submission, and the applicable financial year for first submissions, have been published on the CIPC website.
The way forward for qualifying entities
It is recommended that entities regulated by the CIPC familiarise themselves with all the aspects of the programme via information on the website in order to ensure compliance by 1 July 2018.
Queries can also be directed to XBRL@cipc.co.za.
AUTHOR l Hennie Viljoen – XBRL Programme Manager
