In less than a year, the Companies and Intellectual Property Commission of South Africa (CIPC) will roll-out the first major digital business reporting initiative in the country when it implements the use of eXtensible Business Reporting Language (XBRL) for qualifying entities.
"From 1 July 2018, the submission of annual financial statements (AFS) using XBRL will be mandatory," says Synergy MD, Christo Bredenkamp, whose company is assisting a client that has been invited to participate in a pilot project as part of the roll-out plan for XBRL.
Currently, the CIPC receives all AFS in PDF format. This unstructured free format means analysis of the documents has to be done individually by a human analyst. Calculations are done manually and can be prone to mistakes. In addition, the process is slow and makes it difficult to compare data with that from statements of other companies.
"This in turn limits the CIPC's capacity to perform complex analysis both on individual companies as well as various industry sectors," says Adv Rory Voller, the CIPC commissioner, in a letter outlining the new regulations.
He explains the commission launched a programme in February 2016 to implement XBRL and says the powerful analytical potential of XBRL technology vastly improves the operational efficiency and regulatory effectiveness of the CIPC, as well as the consistency and ease of use of the AFS submission process of entities.
"Analysis of individual AFS, as well as analysis on consolidated data of all participating companies over different periods, will enable the CIPC to detect trends in various industries as well as the South African economy as a whole. This could be used for early warning purposes, identifying investment potential in the economy and the general direction of the economy, and to provide this derived information to other critical organisations such as the Department of Statistics, the SA Reserve Bank and so on."
He adds that client companies (entities) can also benefit from the implementation of XBRL through enhanced accuracy, efficiency, automation of back-end processes with the associated cost savings and productivity improvements.
The XBRL programme includes four discrete stages and these are XBRL planning (February 2016 to August 2016); reporting platform and system development (September 2016 to September 2017); and the current pilot measure and maintain stage (October 2017 to January2018), which entails consolidation of the programme by validating milestones against the plan, alignment of change management and communications plans, technical skills transfer to the CIPC staff, and measurement of results against the plan.
The final stage - the official roll-out (January/March 2018 to April/June 2019) will involve testing of interfaces between the CIPC and identified client companies to ensure technical excellence has been achieved to facilitate the live roll-out of the XBRL implementation.
"According to the CIPC, entities will be required to develop a capability and capacity to produce financials in XBRL format as from 1 July 2018," says Bredenkamp. This will entail development or acquisition of software that will allow financial data to be tagged according to the CIPC's taxonomy for submission of AFS to the commission.
In his letter, Adv Voller says by embracing XBRL, the CIPC embraces international best practices.
"The CIPC programme is the first major digital business reporting initiative in South Africa," he says, adding the CIPC is taking leadership in this regard, "and will provide guidance and orientation to client companies as part of the change management and communications campaign of the programme."
Join Synergy and the CIPC at the XBRL event in August to learn more. Click here to find out more.
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