FOR FINANCE directors across the UK, April 2011 heralded a new dawn in online filing. The introduction of inline Extensible Business Reporting Language, or iXBRL as it’s more commonly known, had been in the making for five years.
However, the lead up to the 1 April mandation date was met with cries of protest from many FDs and accountants as the deadline loomed. This was quickly replaced by a clear sense of urgency as financial teams rushed to be compliant, with many even choosing to file early to avoid the issue altogether.
In reality, many FDs still won’t have submitted their first iXBRL-compliant return due to their year ends being towards the end of the calendar year, or because they filed early. But now the dust has settled after the initial 1 April deadline, it’s a good time to take stock and see what lessons can be learned.
The logic behind iXBRL is simple enough. It provides a method for tagging elements of financial and business reporting data that makes them readable to both man and machine. While the majority of FDs were clear on what was expected of them, making a decision on which route would be best to achieve HMRC compliance for their organisation proved more difficult. Here are some lessons learned from the first wave of submissions that can help FDs be better prepared next time.
Know your options
There are three options available when it comes to iXBRL. First, finance teams can choose to stick to traditional Word and Excel documents, and use a tagging tool to complete their submission. Second, there is the option of a full accounts production tool, which could prove more efficient as it automates both the tagging process and the updates needed to stay compliant with both HMRC and Companies House.
Finally, for FDs who are unclear of the requirements or simply don’t have the resources to manage iXBRL in-house there is a third option of outsourcing to your auditing partner – either for the full iXBRL requirement or simply for a managed tagging service. Take time to investigate this, though, as costs can be prohibitive for smaller companies and they will still need a decent period of notice in order to complete the submissions in time for your deadline.
There was of course also the fourth option chosen by many firms, which was to file early to avoid iXBRL altogether, with some filing as much as six months ahead of time. That may have worked before April, but iXBRL is here to stay so take the time to work out the pros and cons of each submission method to find the approach that works for your organisation.
Don’t leave it till the last minute
The first wave of iXBRL submissions were characterised by both accountancy practices and finance departments rushing to get compliant. Whether you are manually preparing your sets of accounts or using an accounts production tool, you still need to factor in extra time to produce accounts in iXBRL.
Even if you are using an accounts production tool for the most part, there may be some unique sets of accounts that require manual tagging, so leave plenty of time to complete this. Also bear in mind that while an accounts production tool is probably the quickest way to complete your submission, it will take time for the software to be set up and data to be migrated across correctly, which can’t be done at the last minute. If you have a 31 December year-end, you need to be getting your solutions in place now to ensure a smooth transition with minimal disruption.
Someone will need to take overall ownership for iXBRL and ensure that all relevant teams understand how iXBRL affects them. They will need to ensure the automatic tagging of the accounts is correct and any manual tagging required is completed and reviewed. Ensure that your financial reporting and tax teams work closely together to set up the correct processes for submissions.
Clearly, it’s a complex beast, but iXBRL is here to stay. And rather than simply being another layer of bureaucracy, it could actually help finance departments to change the way they work for the better. Take the time to look at the options that will work best for you now and in the long term, and you can avoid the last-minute rush that characterised the first round of iXBRL submissions for so many.
Phill Robinson is CEO of IRIS Accountancy Solutions