The CIPC iXBRL mandate has been around for three years now. In our experience as pioneers for XBRL-based regulatory compliance solutions in South Africa, we have found that many companies in the country are still only realizing the benefits that the XBRL standard brings.
A recent article on Accountancy SA describes eXtensible Business Reporting Language or XBRL-based digital reporting as “one of the key technologies leading the charge of accounting application systems into the 4IR (Fourth Industrial Revolution)”.
XBRL does not change the rules of financial reporting as prescribed by regulators but changes the manner in which financial reports are made, the article adds.
A few benefits that companies in the US started enjoying after complying with the SEC’s XBRL mandate:
- Companies have been enjoying lower costs of capital ever since they started filing in XBRL
- Smaller companies have started receiving more analyst attention because of XBRL filings
- Companies’ performance benchmarking and acquisition analysis has improved due to XBRL
*SEC Commissioner Caroline A. Crenshaw mentioned these benefits in a recent speech.
If filing financial reports in XBRL is known to bring these benefits to companies, there’s a lot more to be gained from creating high-quality CIPC iXBRL reports. That’s what our article is about. We discuss the 5 steps companies need to follow in order to file high-quality CIPC iXBRL (inline XBRL) reports with the CIPC.
Step 1: Understand the CIPC taxonomy
Preparation of iXBRL reports involves tagging your firm’s disclosures with the correct taxonomy concepts or elements in the CIPC taxonomy. A poor understanding of the taxonomy can lead to unnecessary creation and use of extension or custom elements — which is often blamed for quality issues in iXBRL filings. Extension elements need to be formed only when appropriate taxonomy concepts cannot be found for some disclosures.
Step 2: Choose your iXBRL reporting software carefully
A lot depends on the software you use for your iXBRL filings. The software to go for is one that is XII certified and is backed by years of experience in XBRL-based regulatory compliance. Also, look for software that consistently tops independently-conducted XBRL filing quality assessments. Want us to name a solution that checks all these boxes? It’s IRIS CARBON®.
Step 3: Take validation checks seriously
Once your iXBRL filings are complete, they need to be run through an XBRL validator to spot any errors and warnings. IRIS CARBON® comes with an in-built validator called IRIS Bushchat, which can help you spot issues with your filings.
IRIS Bushchat is the validator that the CIPC uses to assess the iXBRL reports being submitted by companies. So, when you prepare your AFS in iXBRL using IRIS CARBON®, you can rest assured that your filing will pass through the CIPC gateway smoothly.
Step 4: Data quality management
Now the report has passed the stage of validation check, you move one step close to a Quality CIPC iXBRL report. The CIPC developed a new Data Quality Management (DQM) framework during the first half of 2021. The purpose of the framework is to improve the regulatory quality of financial data received beyond what automated system validations can guarantee.
The quality of filings from Software Service Providers (SSPs) will be evaluated on a quarterly basis. A number of specific metrics will be used to measure the completeness, correctness, accuracy, and consistency of the information in iXBRL format.
Step 5: Audit
Many investors assume that the iXBRL file has been audited. But that is not true in all cases. Companies must voluntarily have their external auditors review their tags and extensions for an independent view of the quality of their reports. Opting to have your report audited is the final step in ensuring you file a high-quality CIPC iXBRL report.
High-quality CIPC iXBRL reporting will help you with the following:
- Richer and more meaningful financial information
- Reduced cost and time associated with compliance
- Improved efficiency and accuracy in decision-making
- Increased comparability and understandability of financial statements
- A standardized layout that helps in removing bias from reporting
We at IRIS CARBON® have been the earliest providers of XBRL-based regulatory filings in South Africa. In fact, the Companies and Intellectual Property Commission uses an IRIS solution for receiving and processing XBRL reports. We know just what you need to do to file high-quality CIPC iXBRL reports. Check out this link to see our consistent #1 ranking in XBRL quality assessments.