How did it start?
The Companies and Intellectual Property Commission of South Africa (CIPC), has launched a Programme in 2016 to introduce eXtensible Business Reporting Language (XBRL). XBRL is a technology standard that enables the implementation of Digital Financial Reporting, by revolutionizing the way reporting entities submit Annual Financial Statements (AFSs) to the CIPC. The CIPC is the central government agency in South Africa responsible for both registration and regulation of companies and close corporations.
The scope of XBRL reporting applies to a sub-set of around 100 000 qualifying entities, out of a total of around 1.8 million entities registered with the CIPC.
The Commission has mandated submission of AFSs for qualifying reporting entities via XBRL as from 1 July 2018, and a notice in this regard has been published on the CIPC website.
XBRL is gaining momentum worldwide as a best-practise standard for electronic data exchange amongst organizations.
In the case of the CIPC, the following reasons lead to the adoption of XBRL:
- Improved efficiency for dealing with high volumes of reports – manual analysis of large numbers of AFSs will be replaced by automated analysis and validation of reporting criteria;
- Improved regulatory effectiveness – analysis on consolidated statements per industry via Business Intelligence (BI) technology, will replace the limitations of manual sample analysis on individual statements only. XBRL therefore enables improved high-level understanding of business in South Africa;
- By implementing XBRL, the CIPC hopes to pioneer the eventual roll-out of Standard Business Reporting (SBR) in South Africa, where various regulators can share data – the principle of “report-once-share-many”. This will eliminate the need for businesses to report different formats of financial statements to multiple regulators;
- Sharing data with other government agencies can be used for economic policy formulation. The economy as a whole can therefore be impacted in a positive way. Potential data sharing with private investment companies can also assist with better investment advice and decision- making.
Incorporating Account Standards
The CIPCs reporting requirements, as built into the CIPCs XBRL taxonomy (dictionary of financial facts) will be based on the International Financial Reporting Standard (IFRS), pertaining to the format of AFSs. In addition to best-practise technology standards, the CIPC therefore also implements best-practise standards from an accounting point of view.
How is the Programme Progressing?
The Programme is currently in the development phase of the technical reporting platform. This will entail a web portal on the CIPCs website for uploading of XBRL data files. Progress is on track according to planned timelines and deliverables.
Client Interfaces with the CIPC
Every reporting entity will be required to have XBRL-capable software in place for compiling of AFS data in XBRL format, according to the CIPCs published taxonomy.
The CIPC has established a Software Service Provider (SSP) Panel to assist client entities with their selection of software solutions to facilitate interfacing with the CIPC. A number of SSPs have been assessed in terms of their software solutions and services they offer to reporting entities.
A list of recommended SSPs has been published on the CIPCs website. Reporting entities are encouraged to engage with the recommended SSPs for provisioning of client-side solutions. Client entities are under no obligation to only use software and services provided by panel members, but the panel members are recommended, because they demonstrated adherence to the minimum technical requirements of the CIPC.
What is required from Reporting Entities to become Compliant?
A number of business related documents have been published on the CIPCs website (e.g. Frequently Asked Questions and Filers Guidelines), aimed at explaining various aspects and requirements of the Programme. Technical documents and the prescribed taxonomy are also published on the CIPC website (www.cipc.co.za) under the “XBRL Programme” menu.
These documents include for instance clarification on:
- – The entities required to comply to the XBRL mechanism of submission;
- – The exact reporting requirements in terms of statements, disclosures, mandatory data elements and validation rules;
- – Technical requirements (e.g. the prescribed taxonomy and relevant tagging rules when using the taxonomy).
Pilot Phase and Live Roll-Out
The CIPC selected and notified around 100 large JSE listed companies to be part of a pilot test phase starting in February 2018. The purpose of pilot testing is to test functionality of both the CIPCs portal for uploading of AFSs via XBRL, as well as the client-side software used by the companies for producing AFSs in XBRL format.
Pilot companies can use any valid set of statements of any previous year, because submissions during the pilot phase will only be used for testing, and will be discarded from the CIPC system before live roll-out of XBRL.
The CIPC published a list of pilot companies on the website. Companies not part of the official list, are welcome to participate on a voluntary basis.
As from 1 July 2018, all qualifying entities will be required to submit their latest available approved / audited statements on the first date of submission applicable to them. The first date for XBRL submission for every entity is determined by the anniversary date of their date of incorporation. The calculation of the first date of submission of a particular entity is different for close corporations and companies. The exact regulations that apply to every entity to calculate their particular first date of submission, and the applicable financial year for first submissions, have been published on the CIPC website.
Next Steps for Reporting Entities
It is recommended that entities regulated by the CIPC familiarize themselves with all the aspects of the Programme via information on the CIPC website, in order to ensure compliance by 1 July 2018.
Queries can also be directed to XBRL@cipc.co.za.
Hennie Viljoen is the XBRL Programme Manager at the CIPC