Like it or not, companies have no escape from compliance.
You have to adhere to them unless you decide to be on the wrong side of the law.
Considering the disruptive nature of compliance, we agree it can be quite confusing and time-consuming in the beginning. If you do not have the right strategy in hand, you could land in a lot of trouble!
That’s exactly what happened last year when the CIPC directed companies in South Africa to convert their Annual Financial Statements (AFSs) to the iXBRL reporting standard.
The disruption in financial reporting
Prior to the CIPC mandate, companies had to report their AFSs in PDF, an unstructured format. With over 100 000 companies under its purview and the annual reports running up to an average of 165 pages as per a study by KPMG, it is humanly impossible for the CIPC to scrutinize each page to detect and flag the early signs of incorrect information.
The CIPC introduced a new mandate effective 1st July 2018 to bring in standardization and transparency in the way they use and receive financial information This means that companies who were earlier submitting their annual reports in PDF format now have to submit in the Inline XBRL (iXBRL) standard. In fact, the CIPC is so strict about the rule that they have even passed a directive called the Annual Return (AR) Hard Stop to forbid companies from filing their Annual Returns without filing their AFSs in the iXBRL format.
Like every other compliance rule, the iXBRL mandate requires a complete overhaul in the way financial reporting is done with the regulator. You have to train your team for them to understand the scope of the mandate, what information needs XBRL tagging, and how to review it. You may also want to factor in the initial teething issues that may creep in before completing the filing.
Enter iXBRL Partners
You possibly may not have the time and the resources to spend on understanding and filing the AFS, or you may simply find it to be too much of a hassle.
That’s where an iXBRL partner can come to your rescue. They are aware of the nuances of the mandate and are equipped enough to do iXBRL conversions on your behalf.
If you do not have the time and people to dedicate to filing the AFS, you can outsource it to a trustworthy partner.
We say trustworthy because you will find many partners out there vying for your attention. Some may be good; some may overpromise and not deliver.
A trustworthy partner will save you from the hassles of AFS filing with minimal intervention from you and your team.
How to choose the right iXBRL partner?
We take a closer look to help you zero in on the right iXBRL partner.
1 – Research the company thoroughly
A lot of partners will claim to know iXBRL conversion. It will be a good idea to research them thoroughly before finalizing one. We at IRIS CARBON, say that we know the mandate like no one else. When we say it, we mean it. We have implemented iXBRL for the CIPC, and it is an IRIS validator that has been implemented on the CIPC’s filing portal. Our company has experience in handling XBRL across the world in 22 countries, and close to over 1.5 million clients over the last several years. Bottom-line, ask tough questions such as the number of years they have worked, the clients they have handled, and the filings done so far, before finalizing them.
2 – Ask for references
Do not hesitate to ask for testimonials and references of existing and past clients. This will give you an insight into how your experience could be. Ask questions on how the reference customer’s experience has been – specifically around the time for converting the annual report to iXBRL, quality of tagging, how good the support teams are in assisting for solving a query or any problem that you face during the process. Alternatively, check the online reviews to see if people have left any negative feedback for the partner. Choose the partner only if the major opinion is in their favor.
3 – AFS document tagging or template-based tagging
If the shortlisted partner does template-based tagging, you may want to rethink your decision. iXBRL is an output based on HTML format. It is a mirror of how your AFS looks and the manner in which the CIPC sees it. Therefore it is important that the iXBRL is an output file that is well-formatted (if not fancy, CIPC is not looking to receive fancy or stylized annual reports). While you can read the annual report in iXBRL format, this output also has XBRL tags embedded, and the CIPC is interested in both XBRL, the machine-readable data, and the content on the HTML which is the human-readable information. This can be done correctly when the tagging is done on the AFS document. Several players in the market offer quick solutions. So when you evaluate the question to ask is – how do you do the tagging? Is it on-document or template-based? Template-based tagging is risky. It is an inaccurate representation of what’s there in your document, and more importantly, it is not in the manner it is reported in your document. So, choose a partner who does the tagging on the AFS document itself.
4 – Check if the partner offers training
According to the mandate, the company’s authorized personnel has to approve the XBRL tags. It is, therefore, essential for the company personnel to know how XBRL works and have an understanding of what XBRL is and how to review and approve the XBRL tagging. Choose a partner who will train you and your team on the mandate thoroughly. Ask your partner if they would train your team should you decide to do the filing in-house in the future.
5 – Support at all times
You may need your partner’s assistance in the beginning as the process is new. You may have many queries about the tagging or the validation rules when you see the filing not passing through the CIPC filing portal. Look for a partner who will be available more importantly during your work times, if you have an extended schedule, do check if the partner provides extended support coverage. Also, enquire if support is chargeable or comes bundled with the package that you have taken. IRIS, for example, offers unlimited support at no extra cost. ‘Your Compliance is Our Compliance’, that’s how we work, we are always available as per the client’s time zones and work schedules. We also provide extended support coverage and weekend support coverage based on client work schedules.
6 – Filing Success Guarantee
CIPC will reject the iXBRL document if they find validation errors. Check with your partner if they can guarantee a 100% successful filing. The validator present on the CIPC portal is IRIS’ product. We are, thus, able to generate a 100% error-free XBRL output from our platform and guarantee a successful filing in the very first attempt.
Finding the right partner could take some time, but we recommend that you research well before choosing rather than burning your fingers or falling into the wrong books of the CIPC.
We hope this article was useful in giving a broad overview of what you need to look for while evaluating a service provider.
We also offer a free consultation to companies and partners who are required to comply with this mandate. Drop us an email, and we will get in touch with you to offer any guidance or strategy direction that you need.
P.S.: We have a special limited period offer. Speak to our XBRL Consultant at +27 – 72-975-4719, or drop us an email at email@example.com, if you are interested in our offering and decide to send your AFS before 31st March 2019, you get a flat 20% off on your iXBRL filing.