How to select XBRL Tools?
By CA. Ameet Patel
XBRL was an unknown term till a few months ago for most finance professionals. And suddenly, it has become the buzz word with a host of people jumping onto the bandwagon and proclaiming to be XBRL savvy. Across the globe, XBRL has been in place for quite some time now. India has been a late started relatively speaking. However, recent experience of the Govt’s e-initiatives shows that the Indian Govt. is very serious about its e-governance initiatives and that it is only a matter of time before which XBRL becomes the standard reporting language for most Govt reporting.
With the Ministry of Corporate Affairs mandating submission of financial statements in XBRL format for certain class of companies, we are already seeing several new software vendors joining the bandwagon of XBRL offering XBRL tools at various prices. Some of these tools might not have even passed the beta tests also. Since most of the time, the clients of Chartered Accountants expect the auditors to perform all peripheral tasks relating to the audited accounts, it is more than likely that many affected companies will seek the assistance of their CAs in converting the financials for FY 2010-11 into XBRL format for being uploaded onto the MCA site. In such a situation, the CA would be in a situation where he is reading daily advertisements by various vendors offering all kinds of tools at all kinds of prices. Some of these prices are high while some are very low. Naturally, this will confuse the CA who has no knowledge of XBRL and how it works. While the Infotech & 4i Committee of the BCAS is planning a few events to help its members in this behalf, the author would like to provide a trailer to the same by sharing some points which a user may want to consider before selecting a particular XBRL Tool. Therefore, this article aims at providing some practical tips on the subject of selection of the right tools for XBRL conversion. Readers are requested not to be drawn merely by low prices. Please do check the credentials of the so called software vendors before buying their products.
1. Does the XBRL Tool find a place in the list of “Approved Software” of an International Regulator viz. SEC, USA or HMRC, UK?
2. Does the XBRL Tool find a place in the list of Software at XBRL International’s Website? Please check out the list of XBRL Tools at the following Web Link:-
In the Indian context, it is likely that most tools in the market today will not meet with the above criteria. In such a situation, you need to consider the following additional points:
3. For how long has the XBRL Tool been in existence?
4. How many users have used the XBRL Tool?
5. Check out user’s experience report. It is always a good idea to speak to other existing users for their reference.
6. How long has the vendor been into XBRL tools development?
7. Does the vendor have knowledge of XBRL specifications, best practices, taxonomy etc.?
8. Does it provide you options for tagging the data viz. filling data, mapping of data etc.?
9. Does it collects data seamlessly or is one required to change the format before loading the data in the tool? Obviously, the tool which can collect data from MS Excel, MS Word & Adobe PDF provides you a better option considering the fact that most people use accounting software that throws up financial statements in either of these popular formats.
10. Does it do automatic rounding off or will that throw up validation errors?
11. Does it do automatic tagging?
12. Does it help in subsequent year’s tagging?
13. Does it provide facility to edit the Instance Document?
14. Does it have an XBRL viewer?
15. Does it create HTML file of XBRL Instances also? The auditor will need it for certification of XBRL Instance Documents.
16. Does it create a good audit trail for auditors?
17. How easy is it to operate the tool?
18. How good is the work flow visibility in the XBRL Tool?
19. How good is the back-up support of the vendor? We all know that the pre sales services is often far better than after sales services. Does the vendor have enough people with him to provide after sales service to his customers when they need it?
20. Can the tool be integrated with SAP or any other ERP system?
21. Does it have a strong validation system of its own?
22. Does it have a Taxonomy Editor also? It is learnt that from next year onwards, extension of taxonomy will be allowed.
In my opinion (and I know that many people do not agree with this) that the user of an XBRL tool needs to have basic knowledge of XBRL to understand the implication of the questions mentioned hereinabove. It is similar to the situation where you need to have the basic knowledge of accountancy before you start operating any accounting package.
We are living in exciting times where technology is dramatically changing the way we carry out our daily functions. Our profession will have to upgrade its technological skills considerably to be able to cope with the changes that technology brings. The BCAS will, as usual, play an important role in this regard for its members. Stay with us.
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