According to a directive issued by the Companies and Intellectual Property Commission (CIPC) in South Africa on July 1, 2018, annual financial statements (AFS) have transitioned from their current PDF format to a structured data reporting system that uses the Inline eXtensible Business Reporting Language (iXBRL) format.
In this write-up, we answer the most frequently asked questions about the CIPC iXBRL Mandate.
Why Has CIPC Mandated iXBRL Reporting?
CIPC adopted the iXBRL reporting format to help businesses digitally submit their financial information with ease and efficiency and maintain transparency in the business environment. The iXBRL format replaces the traditional PDF format and automates the process of data collection, analysis, and communication. It terminates the process of paper-based analysis of the AFS. Thus, it reduces the chance of errors made by humans when analyzing the financial data of a large number of companies.
The iXBRL reporting format makes the whole financial data value chain more efficient, accurate, and useful, aiding in quick decision-making based on financial data.
In the long term, iXBRL reporting is believed to bring down expenses incurred for reporting and mitigate the burden of multiple or duplicate submissions to different regulators in South Africa.
What Is Inline XBRL? What Is The Difference Between XBRL And iXBRL?
Globally, regulators and filers are leveraging the eXtensible Business Reporting Language (XBRL) to report business and financial information. But the XBRL format can be interpreted only by machines. Therefore, the inline eXtensible Business Reporting Language (iXBRL) format, which makes information both machine-readable and human-readable, came into existence. The primary objective of introducing iXBRL is to enable preparers to preserve the original view and formatting of the source document when generating an XBRL document.
|An XBRL document is machine-readable only||An iXBRL document is machine-readable as well as human-readable|
|An XBRL document has the appearance of computer code||iXBRL output has the appearance of a PDF or HTML (webpage)|
|You would need a special XBRL viewer application to render XBRL data||iXBRL output can be rendered on any standard web browser|
|XBRL offers limited flexibility for formatting||iXBRL offers several options to format or retains the formatting of a report|
|An XBRL instance (machine-readable instance) must be filed in addition to a human-readable HTML instance||An iXBRL instance document contains both machine-readable and human-readable layers|
What Needs To Be Submitted In The iXBRL Reporting Format?
Based on Companies Act provisions, all companies must file their AFS along with their annual returns when complying with the CIPC iXBRL mandate. This comprises the primary financial statements (PFS), namely:
- Statement of financial position (current/non-current and order of liquidity)
- Statement of comprehensive income (profit or loss – by function and nature of expense)
- Statement of comprehensive income (Other comprehensive income/ OCI components presented before tax and net of tax)
- Statement of cash flows (direct and indirect method)
- Statement of changes (in equity and net assets available)
Who Needs To Submit Their AFS Using The iXBRL Reporting Format?
To meet CIPC iXBRL reporting requirements, companies need to calculate the Public Interest (PI) Score at the end of each financial year. The PI score is calculated considering factors such as liabilities, turnover, employees, and shareholders. The score helps determine:
- The type of AFS that needs to be prepared (audited or independently reviewed)
- The financial reporting standards applicable to a company (IFRS or GRAP)
Calculate your company’s PI Score here before preparing your AFS.
Starting in October 2020, the CIPC iXBRL mandate incorporated the Generally Recognized Accounting Practice (GRAP) standards, which would help South African state-owned enterprises (SOEs) prepare their financial statements in iXBRL. The entities that fall in this category are – departments (including national and provincial, and government components); public and trading entities; constitutional institutions; municipalities and boards, commissions, companies, corporations, funds, or other entities under the ownership control of a municipality; and parliament and the provincial legislatures.
In February 2022, the CIPC notified all co-operatives in South Africa to file their annual reports with the registrar along with their annual financial statements in the iXBRL reporting format. It becomes mandatory from 1st October 2022 for all co-operatives to comply with the CIPC iXBRL mandate.
When To Submit The AFS Using The iXBRL Reporting Format?
The CIPC iXBRL filing deadlines are as follows.
File with the CIPC within 30 business days from your company’s registration date.
For Close Corporations:
Close Corporations must file within 60 business days from the date of registration.
Note: In addition to their annual report, entities must disclose their most recent audited or independently verified AFS, on the same day. A penalty may be imposed on the responsible party if the above-mentioned timeline is not adhered to.
How Does iXBRL Reporting Work For CIPC?
Inline XBRL reports are prepared by tagging the disclosures in a financial statement with the relevant machine-readable concepts in a taxonomy. Companies need to develop a solid grasp of the CIPC taxonomy within their reporting teams.
Find the latest CIPC iXBRL taxonomy, here.
CIPC even mandates block-tagging of the accounting policies, director’s reports, director’s responsibility statements, independent auditors/reviewers reports, company secretary reports, corporate governance reports, and notes. This involves the full text given in the sections to be tagged as block text in the taxonomy.
The CIPC has provided a list of Software Service Providers (SSP) that would provide solutions to keep the complicated task of tagging at bay for the issuers.
How Can Companies Prepare CIPC iXBRL Documents?
Companies have the following options to choose from for developing iXBRL documents for submission with the CIPC. A company can choose an appropriate option based on its requirement.
In-House Reporting: The in-house reporting option involves a SaaS solution license. Companies must ensure the SaaS vendor has the latest CIPC iXBRL taxonomy version installed. An in-house solution allows companies to tag their financial statements based on the CIPC taxonomy concepts.
Out-Sourced Solution: In this option, a reliable service provider helps the company with the iXBRL production. In this case, the company is just required to supply the vendor with a non-XBRL version of the AFS. The data is then precisely tagged by the software vendor using the most recent taxonomy.
How To Submit The AFS On The CIPC iXBRL Portal?
The CIPC provides a web portal that companies can use as a means to upload their AFS or enter the desired data in iXBRL. Here’s how you can submit your AFS using the CIPC iXBRL portal:
The CIPC web portal authenticates issuers as users of CIPC e-Services as soon as they log in with their credentials.
After the authentication, issuers may upload their files to the CIPC web portal.
The CIPC portal will validate the uploaded AFS to ensure the machine-readable elements pertain to the latest CIPC taxonomy
The users will receive an e-mail informing them whether the submission was accepted or denied.
If the AFS is rejected after validation, the user will receive a report that details the specific reasons for failure.
Once a company rectifies the problems or errors, it is free to re-submit the revised AFS.
The transition from PDF annual reports to iXBRL documents modernizes the way South African companies communicate their data. It is an effort by the CIPC to align the AFS reporting process to globally-accepted standards. And there is a need to constantly upgrade processes.
On October 1, 2021, the CIPC developed an improved Data Quality Management (DQM) framework aimed at ensuring that the financial data collected from companies is of higher quality than that guaranteed by the CIPC’s iXBRL validations. The DQM uses specific metrics to measure the completeness, correctness, accuracy, and consistency of information published in the iXBRL reporting format.
Is preparing high-quality iXBRL reports seem like a task? All you need is a compliance solutions vendor that commits to providing budget-friendly software and support without compromising on quality.