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Chartered accountants in the business of auditing company balance sheets can reap an extra bonanza soon. For, companies will now have to get their financial statements filed in XBRL format with the Ministry of Corporate Affairs (MCA) compulsorily certified by statutory auditors.
The MCA's new directive applies to all listed companies and also unlisted firms with a paid-up capital of at least Rs 5 crore or those with turnover of Rs 100 crore and above. Theoretically, that would cover about 40,000 firms, who even if they pay Rs 50,000 each (for XBRL certification) would generate professional fees of Rs 200 crore to chartered accountants.
While practicing chartered accountants may have a reason to celebrate, the Centre's latest decision is unlikely to be welcomed by companies, who would now be paying auditors twice – once for carrying out regular statutory audit and another for certifying the correctness of their financial statements filed under XBRL mode in the MCA-21 portal. This, India Inc contends, adds to their compliance costs.
Filing in XBRL mode will be effective in respect of financial statements closing on or after March 31, 2011, the corporate affairs ministry has said.
XBRL (eXtensible Business Reporting Language) is a ‘digital' language that has been developed to provide a common electronic format for business and financial reporting.
The CA Institute President, Mr G. Ramaswamy, had recently said that he was in favour of allowing statutory auditors (chartered accountants) to collect professional fees for certification of financial statements under XBRL mode. “Whenever there is additional work like certification, there has to be requisite fees (as compensation),” he noted.
For the year 2010-11, where books are closed on March 31, 2011, all listed companies in India and their Indian subsidiaries, all companies having paid-up capital of Rs 5 crore and above and all companies having turnover of Rs 100 crore and above are required to file XBRL format information by September 30. Exceptions have been made for banking, insurance and power companies, and NBFCs.
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