XBRL- CA CERTIFICATION

Chartered accountants in the business of auditing company balance
sheets can reap an extra bonanza soon. For, companies will now have to
get their financial statements filed in XBRL format with the Ministry
of Corporate Affairs (MCA) compulsorily certified by statutory
auditors.

The MCA's new directive applies to all listed companies and also
unlisted firms with a paid-up capital of at least Rs 5 crore or those
with turnover of Rs 100 crore and above. Theoretically, that would
cover about 40,000 firms, who even if they pay Rs 50,000 each (for
XBRL certification) would generate professional fees of Rs 200 crore
to chartered accountants.

While practicing chartered accountants may have a reason to celebrate,
the Centre's latest decision is unlikely to be welcomed by companies,
who would now be paying auditors twice – once for carrying out regular
statutory audit and another for certifying the correctness of their
financial statements filed under XBRL mode in the MCA-21 portal. This,
India Inc contends, adds to their compliance costs.

Filing in XBRL mode will be effective in respect of financial
statements closing on or after March 31, 2011, the corporate affairs
ministry has said.

XBRL (eXtensible Business Reporting Language) is a ‘digital' language
that has been developed to provide a common electronic format for
business and financial reporting.

The CA Institute President, Mr G. Ramaswamy, had recently said that he
was in favour of allowing statutory auditors (chartered accountants)
to collect professional fees for certification of financial statements
under XBRL mode. “Whenever there is additional work like
certification, there has to be requisite fees (as compensation),” he
noted.

For the year 2010-11, where books are closed on March 31, 2011, all
listed companies in India and their Indian subsidiaries, all companies
having paid-up capital of Rs 5 crore and above and all companies
having turnover of Rs 100 crore and above are required to file XBRL
format information by September 30. Exceptions have been made for
banking, insurance and power companies, and NBFCs.

(This article was published in the Business Line print edition dated
July 14, 2011)