This ad will auto close in 10 seconds

MCA finds inaccuracies in cos' financial disclosures

The Ministry of Corporate Affairs (MCA) has raised concerns about "misleading" inaccuracies in financial disclosures made by some companies in filings made through the new reporting format XBRL.

New Delhi: The Ministry of Corporate Affairs (MCA) has raised concerns about "misleading" inaccuracies in financial disclosures made by some companies in filings made through the new reporting format XBRL.

Concerned over the inaccuracies, that were noticed during a random scrutiny, the Ministry has flagged the issue with representative bodies of chartered accountants, cost accountants and company secretaries.

To ensure better transparency, the companies are now required to furnish financial statements in the eXtensible Business Reporting Language (XBRL) format, replacing the PDF format.

"A random scrutiny of XBRL filing of financial statements by few companies to MCA for FY2010-11 reveals significant variations in disclosures in published results and the XBRL filings due to 'incorrect' mapping of disclosures," the Ministry said in a communication on October 16.

According to the Ministry, such filings are inaccurate and do not adequately represent true and fair view of the company's state of affairs as per Section 211 of the Companies Act, 1956.

"Such XBRL filings, apart from being misleading, also dilute the effectiveness of XBRL for stakeholders' usage relating to the companies," it said.

The inaccuracies were found in e-forms that were certified by "Chartered Accountant/Company Secretary/Cost & Works Accountant professionals for their completeness and correctness in representation with respect to audited financial statement of the company".

The communication has been sent to the Institute of Chartered Accountants of India, Institute of Company Secretaries and Institute of Cost Accountants of India.

Following the discrepancies, the Ministry has also cautioned that professionals, who have certified such incorrect data, are even liable to be penalised.

"It is unfortunate that professionals have certified the authenticity of such incorrect data, for which they are liable to be penalised.

"Such lapses defeat the very purpose of introducing XBRL filings which are meant to elicit more detailed and refined information as to affairs of companies," the Ministry said.

The Ministry is also minutely scrutinising XBRL filings of a large sample of companies to check whether there are similar mistakes.

Among others, it was found that annual report presented before the shareholders had figures in thousands whereas in the XBRL documents, the figure were given in lakhs.

As per the Ministry, it has been observed that few disclosures were mapped/tagged with incorrect accounting concept despite availability of appropriate element in taxonomy.

"It has also been observed that provisions of Block Text tagging and/or Footnote have been inappropriately used to report disclosures like subsidiary details, related party transactions, director's report etc.," the Ministry noted.

Even when appropriate elements were available in the taxonomy for such disclosures, it added.

"It is bounden duty of Institutes to direct its members to take necessary steps to improve the quality of XBRL filing for FY 2011-12 to be undertaken by its members," the communication said.

The Ministry has also suggested that institutes might conduct further trainings and issue guidelines, as part of efforts to ensure that quality related issues of XBRL filings are appropriately resolved.

The last date for companies to file financial statements in XBRL format for financial years starting on or after April 2011 is November 15 this year or 30 days from the date of their Annual General Meeting.


From Zee News

0 Comment - Join the Discussions