2 Consequences for Non-Filing XBRL Balance Sheet Mode to ROC.

XBRL- eXtensible Business Reporting Language As the title explains XBRL Balance Sheet mode is a unique language to describe financial statements of financially big companies and companies listed on the stock exchange.

As we all are aware tabular data looks good in an Excel spreadsheet and the detailed written content fits better in MS Word similar to balance sheets and audit reports –It is presented better in XBRL mode, where they can be studied in a better way of presentation.

XBRL is a universally accepted phenomenon to file financial data of a company in consonance with the accounting policies and procedure, the universally accepted language over the internet for transmission of financial information.

Consequence 1: Non-Compliance Penalties

One significant consequence of not filing an XBRL Balance Sheet with ROC is the imposition of non-compliance penalties. These penalties are financial sanctions imposed by regulatory authorities to enforce adherence to reporting standards and deadlines.

Consequence 2: Legal Ramifications and Regulatory Scrutiny

Non-filing of XBRL Balance Sheet can lead to legal repercussions and increased regulatory scrutiny. This could result in investigations and audits, potentially leading to further fines or even legal action against the company and its directors.

In summary, non-filing of XBRL Balance Sheets can have serious repercussions for companies, both financially and legally. It’s crucial for businesses to prioritize compliance with reporting requirements to avoid these potentially damaging consequences. Utilizing XBRL ensures accurate and standardized reporting, benefiting not only regulatory authorities but also investors, analysts, and the wider financial community.

Which Companies are Required To Do XBRL Balance Sheet Filing?

Below mentioned class of companies is required to file their financial statements and other documents under section 137 of the Companies Act, 2013 with the Registrar in e-form AOC-4 XBRL:

– All companies listed on the stock exchange in India and their Indian subsidiaries.

– All companies with a turnover of Rs. 100 crores or more

– All companies with a paid-up capital of Rs. 5 crores or more

– All the companies are required to prepare their financial statements in accordance with the Companies (Indian Accounting Standards) rules, 2015.

But Following the Class of companies is out of the purview of filing financial statements and Annual reports in XBRL.

• Non-banking financial companies,
• Housing finance companies and
• Companies engaged in the business of the Banking and Insurance sector

are exempted from filing financial statements under these rules.

Note: If XBRL filing applies to a company in any current financial year, then it will apply to a company for succeeding financial years as well. Once applicable always applicable.

What are The Consequences of Non-Filing of the XBRL Balance Sheet?

Penalty for Delayed XBRL Filing of Balance Sheet

Compliance reporting in XBRL mode is a professionally managed procedure that sometimes could not be completed in a 30 day time span as provided under the Companies Act, 2013 therefore the company has to bear the penalty for delay in financial reporting of XBRL in AOC-4 XBRL.

Set of Documents Required for Filing of XBRL Balance Sheet.

XBRL instance document is required to be prepared as per MCA Taxonomy (I-GAAP / IND-AS). According to MCA Taxonomy, a complete set of Annual Reports is required to be filed in XBRL format. Separate instance documents are to be prepared for consolidated and standalone reports. Major components of the Annual report are noted below:

• Balance Sheet
• Profit and Loss Statement
• Cash Flow Statement (Direct or Indirect)
• Significant Accounting Policies
• Schedules & Notes to Balance Sheet and Profit and Loss Statement
• Statement of Change in Equity
• Independent Audit Report with annexures thereto
• Director or Board Report with annexures thereto

Here’s a detailed explanation of the set of documents required for filing an XBRL Balance Sheet

1. XBRL Instance Document Preparation:
   • The XBRL instance document is a crucial component in the filing process. It must be prepared in accordance with the Taxonomy specified by the Ministry of Corporate Affairs (MCA), which could be either Indian Generally Accepted Accounting Principles (I-GAAP) or Indian Accounting Standards (IND-AS).
2. Annual Reports in XBRL Format:
   • As per the MCA Taxonomy, a comprehensive set of Annual Reports must be submitted in XBRL format. These reports encompass a range of financial documents and statements, providing a comprehensive view of a company’s financial performance over the reporting period.
3. Separate Instance Documents for Consolidated and Standalone Reports:
   • In the case of companies that have subsidiary entities, separate instance documents need to be prepared for both consolidated and standalone reports. This ensures that the financial data is accurately presented for both the individual company and the entire group.
4. Components of the Annual Report:a. Balance Sheet:
   • The Balance Sheet provides a snapshot of a company’s financial position at a specific point in time, detailing its assets, liabilities, and equity.
   b. Profit and Loss Statement:
   • This statement outlines a company’s revenue, costs, and expenses over a specific period, ultimately resulting in either a profit or loss.
   c. Cash Flow Statement (Direct or Indirect):
   • The Cash Flow Statement tracks the inflow and outflow of cash and cash equivalents, offering insights into a company’s liquidity and solvency.
   d. Significant Accounting Policies:
   • These policies serve as a framework for preparing and presenting financial statements, ensuring consistency and transparency in financial reporting.
   e. Schedules & Notes to Balance Sheet and Profit and Loss Statement:
   • These supplementary documents provide detailed explanations and breakdowns of various line items in the Balance Sheet and Profit and Loss Statement, offering additional context to stakeholders.
   f. Statement of Change in Equity:
   • This statement shows how a company’s equity changes over a specific period, including transactions with shareholders and any changes in retained earnings.
   g. Independent Audit Report with Annexures:
   • The Independent Audit Report is prepared by external auditors and provides an assessment of the fairness and accuracy of the financial statements. Annexures may contain additional information or explanations.
   h. Director or Board Report with Annexures:
   • This report, prepared by the company’s directors or board, provides insights into the company’s performance, strategy, and other relevant information.

These documents collectively form the Annual Report package that needs to be submitted in XBRL format, ensuring compliance with regulatory requirements set forth by the Ministry of Corporate Affairs.

05 Key Points to Be Considered While Preparing XBRL Balance Sheet

Certainly! When preparing an XBRL (eXtensible Business Reporting Language) balance sheet, there are several key points to consider. XBRL is a standardized format for financial reporting that allows for easier analysis and comparison of financial data. Here are five important considerations to keep in mind:

1. Accurate Financial Data: Ensure that all financial data presented in the balance sheet is accurate and up-to-date. This includes figures for assets, liabilities, and equity. Double-check calculations and verify the integrity of the data before converting it into XBRL format.
2. Standardized Taxonomy Selection: Choose the appropriate taxonomy for your industry and jurisdiction. Taxonomy refers to the specific set of tags and labels used to identify financial elements in XBRL. Selecting the correct taxonomy is crucial for accurately representing your financial information.
3. Consistency in Tagging: Consistency is key when tagging elements in your balance sheet. Each financial item (e.g., cash, accounts receivable, long-term debt) must be tagged with the appropriate XBRL tag from the chosen taxonomy. Consistent tagging ensures that the data is correctly interpreted by users and software applications.
4. Contextual Information: Provide context for each element in the balance sheet. This includes information such as the reporting period, currency used, and any applicable measurement units. Clear contextual information helps users understand the financial data in the proper context.
5. Validation and Review: Before finalizing the XBRL balance sheet, conduct a thorough validation process. Use XBRL validation tools to check for errors, inconsistencies, and compliance with the chosen taxonomy. Additionally, review the balance sheet to ensure that it accurately reflects the financial position of the company.

By following these key points, you can effectively prepare an XBRL balance sheet that meets industry standards and provides valuable financial information to stakeholders and regulators.

The procedure of XBRL Balance Sheet Filing to ROC.

The process for the creation and filing of Financial Statements in XBRL mode is as under:

Step 1: Creation of XBRL instance document.

Step 2: Download the XBRL validation tool from the MCA portal.

Step 3: Use the tool to validate the instance document.

Step 4: Perform pre-scrutiny of the validated instance document through the tool.

Step 5: Attach the instance document to the Form AOC-4 XBRL.

Step 6: Submit Form AOC-4 XBRL on the MCA portal.

Applicability of Filing Cost Audit Report in XBRL Balance Sheet to ROC.

A company required to furnish a cost audit report and other documents to the Central Government under sub-section (6) of section 148 of the Act and rules made thereunder, shall file such report and other documents using the XBRL taxonomy given in Annexure-III for the financial years commencing on or after 1st April 2014 in e-Form CRA-4 specified under the Companies (Cost Records and Audit) Rules, 2014.

Who will Certify the Balance Sheet filed in AOC 4 XBRL?

Any practicing professional, whether a company secretary, cost accountant, or chartered accountant, can certify the E-form AOC -4 XBRL for filing the same at MCA with the requisite fee.

Ending Notes for XBRL Balance Sheet

If a company voluntarily wishes to file its financial statements in XBRL mode there is no restriction as per the company act to file the same in AOC 4 XBRL as per their voluntary action, for a better presentation of Annual financials, it is always advisable to take professional guidance before filing regulatory compliances of the company.

References

1. https://meridian.allenpress.com/jis/article-abstract/27/1/61/75725/XBRL-Mandate-Thousands-of-Filing-Errors-and-So
2. https://meridian.allenpress.com/accounting-horizons/article-abstract/22/3/353/68315/Assurance-on-XBRL-for-Financial-Reporting