The implementation of iXBRL filing is an issue that all medium and small companies need to start preparing for now.
The acronym iXBRL refers to Inline eXtensible Business Reporting Language.
It means that any financial documents submitted have to be ‘tagged’ so that they can be read and interpreted by a computer system, while still being legible to humans. Previously, it was acceptable for financial data to be submitted in a document that was read by people. However, computer analysis would be more beneficial as there would be faster and more accurate data sharing, better service turnaround and a better risk focus. iXBRL tagging would also bring more alignment with global accounting standards such as GAAP and IFRS as it is a universal digital language that can be tailored to any country’s standards.
The first stage was rolled out by the Revenue Online Service (ROS) last October for the biggest organisations – known as Large Cases Division (LCD) – but it has been optional for all companies that are Corporation Tax payers since the end of 2012. From the 1st October 2014, phase 2 will kick in meaning that all non-LCD companies have to file accounts using iXBRL tagging. Exemptions include:
- Companies with a balance sheet of less than €4.4m
- Companies with a turnover of less than €8.8m
- Companies with an average of less than 50 employees
The last stage – phase 3 – will apply to all remaining Corporation Tax payers. This is expected to begin sometime in 2015, but the Revenue has not yet announced which date.
The Revenue will be putting on free roadshows throughout Ireland in September explaining how iXBRL works and what you need to do. You can find more information about venues and dates here.
On the face of it, all the extra tagging required to be iXBRL compliant means a lot of extra work. It would be extremely difficult to do this properly without using specific software.
Although in the UK HMRC list recommended software that has acceptable iXBRL functionality, the Revenue will not be doing the same in Ireland. However, on their website it says: Revenue will accept accounts prepared in accordance to the UK GAAP or IFRS taxonomies supplemented by “Irish Extensions” which bridge the differences between UK and Irish standards. These are being incorporated into standard accounting software packages available on the Irish market.”
Sage already has a solution. iXBRL tagging was introduced as a free update within the Accounts Production suite last September to ensure users remained compliant. For anyone who is considering buying the software for this reason, it will save an awful lot of time.
Product Manager, Chris Strong, is Sage’s in-house expert on iXBRL: “Most compliance changes cause some disruption. Importantly for accountants, iXBRL in particular changes the accounts preparation workflow.
“For us, iXBRL was an unusual problem to solve. Our biggest challenge was to ensure our customers have a solution to be compliant without getting in their way of doing their work. Our iXBRL feature is built directly into our Sage Accounts Production software. It maintains the accounts preparation workflow by automatically tagging known information and then allowing our customers to check and confirm tags for a specific set of accounts.
“Thinking further ahead, iXBRL will become more widely used as regulators, standards setters, data consumers and other bodies recognise the benefits of using easily accessible data. As the adoption of iXBRL increases, the tools to start mining data will become more readily available. For example, we’re not too far from investors utilising iXBRL data to compare different companies.
“We’re already looking to the future to develop tools that will allow accountants to serve their clients better by providing them deeper insight.”
Brain Soye is a partner at McQuillan Kelly & Company Chartered Accountants in Dublin. He said he is just getting to grips with iXBRL: “We have a couple of UK-based clients for whom we have had to submit iXBRL compliant accounts to HMRC. We did this by sending the accounts over to Sage who then converted them for us. We expect to start using the software on our own in the next few weeks for most of our other Irish clients. I must admit I’m slightly worried, but I’ve had a great experience with Sage so far, and I’m sure the software will save me countless hours.”