The financial ecosystem of every economy is a distinct and fragile system of interdependencies. Through various stages of its life, companies depend on the influx of fresh investments for it to perform well and in turn give good yield to those who had made the investment. Making a well-informed decision about which entity to invest in, becomes imperative for investors. And, as the AFS is the document that would give a holistic view of the health of the entity, it is obvious that any investor would choose to analyze it before making the call to invest. However, going through thousands of pages for hundreds of potential investee companies cannot possibly be fun, right? That’s where a global standard that is analyzable by machines and readable by humans plays a vital role in making things simpler. iXBRL (Inline XBRL) is the next step in the evolutionary ladder of the international standard – XBRL, which, in the last decade has helped make financial reporting much simpler and, well, better.
A financial report is a lot of things bundled into one. It can be a means of communicating the health of the entity to its internal stakeholders, such as the board of directors, analysts, employees, etc. It can also mean a way to generate confidence in the minds of its potential investors. Whatever way it is perceived, an AFS (Annual Financial Statement) is essentially a 100+ pages annual report card of a company. It is imperative that the data being reported in this report card is accurate, as a lot of investments, public money, and perhaps, the nation’s economy depends on it. Failing to report the right or accurate data (intentionally or erroneously) in the AFS can and has resulted in huge losses. The major blockage on the path of analyzing and verification of this data has been the manual nature in which the AFS was lodged with the CIPC. Therefore, to ensure that the data being reported in the AFS is accurate, the CIPC implemented the iXBRL mandate on 1st July 2018.
The primary goal of the CIPC in implementing the iXBRL mandate is to stop incorrect/erroneous reporting of financial data, thus bringing in more transparency in financial reporting. A derived/indirect outcome of this is how easy it has made for investors to analyze the AFS and discern which entity to invest in. The availability of the AFS in iXBRL makes it easier and faster to process the reported data; with the analyses, investors can make an informed investment decision without wasting too much time in the process.
After decades of economic distress and corruption in the system resulting in some of the biggest financial scams in history, South Africa, seemingly by sheer will, has not only recovered but has kept its lead in this march of progress and development. Investments are starting to flow more freely, existing businesses are flourishing, startups are no longer a distant dream for aspiring entrepreneurs and the overall economy is looking at crisp sunshine after a long winter.
The CIPC was the first regulator to have realized the importance of global standards for financial reporting. Not only has the CIPC implemented an iXBRL mandate, but it has also taken several steps – issuing notices and penalties for non-compliance – to ensure that all qualifying entities file their AFS in iXBRL. Now, in its second year of implementation, the CIPC iXBRL mandate with an upgraded taxonomy continues its relentless pursuit of a transparent, systematic, technologically advanced, and corruption-free South African business ecosystem. Amid such progressive steps toward standardized financial reporting, the outlook and positively, the ROI for potential investors is quite promising.
IRIS has 14 years of experience in compliance reporting and Disclosure Management, with a sharp focus on XBRL and iXBRL. IRIS solutions are being used by the CIPC to receive and validate all iXBRL documents in South Africa as per CIPC iXBRL mandate. IRIS CARBON®, our cloud-based collaborative platform backed by our expert service, is being used by thousands of entities across the world, including in South Africa, to improve their reporting process and to prepare XBRL and iXBRL outputs. IRIS is a member of XBRL International, XBRL South Africa, XBRL EU, XBRL US, and part of various XBRL working groups.
