3 Reasons You Shouldn't Lose Sleep Over the CIPC iXBRL Mandate

3 Reasons You Shouldn't Lose Sleep Over the CIPC iXBRL Mandate
25 June 2018

The date of 1 July 2018 may seem innocuous to most, but it will undoubtedly play a pivotal role for financial reporting professionals in South Africa.

After this date, the Companies and Intellectual Property Commission of South Africa (CIPC) will no longer accept annual financial statements (AFS) from qualifying entities in PDF format—until now, the reporting format of choice. Instead, filers will switch to Inline XBRL (iXBRL).

What is iXBRL? To answer that question, we must know about XBRL. In a nutshell, XBRL provides a language in which reporting terms can be authoritatively defined.

iXBRL takes this a step further by allowing filers to embed XBRL tags into HTML-formatted financial statements, rather than filing a separate XBRL instance document. iXBRL maintains the human-readable HTML format of the financial statements when viewed in a web browser while adding the XBRL tagging.

The rationale for the shift is plain, explains Hennie Viljoen, Project Manager at the CIPC:

"The use of XBRL will bring a new dimension of efficiency and effectiveness to the CIPC because the standard allows automatic validation of AFS data against the IFRS taxonomy...[It] has the potential to improve the efficiency, accuracy and effectiveness of the whole value chain of financial data."

While the reasoning is sound, financial reporting professionals on the front line are more worried about precisely how they will make the change.

Fortunately, reporting professionals concerned about the change can take solace in these three facts:

1. Numerous companies are experiencing the same adjustment.

If the shift toward iXBRL seems daunting, remember that you are not in it alone. In fact, a broad swath of other entities will now be using iXBRL, including:

  • All public companies
  • Private companies (qualifying and currently submitting using PDF)
  • State-owned companies
  • Nonprofit entities
  • Close corporations (qualifying and currently submitting using PDF)

2. Your reporting practices will benefit from the switch.

Transforming your organisation's reporting processes requires a closer look at the minutiae of reporting, from beginning to end. Ultimately, this will help your team shed unnecessary processes.

After all, South Africa is not the only country where XBRL is embraced. As XBRL.org explains, XBRL is used in more than 50 countries, and millions of XBRL documents are created every year. The number of countries that are embracing XBRL is only increasing, and regulations will only become more onerous. By future-proofing your processes today, your organisation becomes more agile for the future.

3. Modernised reporting will bring modernised tools to your team.

Countless financial reporting teams are hindered by creating AFSs in legacy software not designed for the complex reporting function. And, as iXBRL becomes a necessity, these tools will further miss the mark.

Use the iXBRL mandate as an opportunity to upgrade your reporting tools. Modern software can help finance teams streamline reporting, minimise risk and serve as key consultants to stakeholders. An added bonus—according to one study, younger generations are more likely to be drawn toward the technological sophistication of prospective employers.

If you have outgrown desktop software—whether by mandate or not—it is time to look to the cloud. Cloud solutions are the leading source of process innovation that generates measurable productivity gains in financial reporting.

Download The Controller's Guide to Automation for an in-depth look at making the shift to the cloud and what benefits lie within.