It is now compulsory for many companies to file their Annual Returns in XBRL format. Let us look at the process involved in doing this:

You convince a company that you are capable of converting their pdf / other formats into xbrl format.

Then the company sends you the annual return. Assuming it is in non HTML format, you need to convert it to HTML format. This is then loaded to a software which will help you in the tagging. Once you convert the financial accounts into HTML format, you start the tagging. Tagging is a process by which you find the appropriate tags for the P&L items and the B/S items.

Then you tag the Auditor’s Report, Director’s Report and the Notes on Accounts – these are a little easier than the accounts.

Once you do the tagging – a simple company will take about 20-30 hours of effort, at the least.

Once the tagging is over, and the document is converted into XBRL format, it can be sent to the client.

However, the client will not be able to read it, so a human readable format has to be created for the same. This could take the form of pdf or excel. This will be in human readable form for the client and the Chartered Accountant certifying it.

The CA may come up with some regrouping of the same – and the re grouping will have to be done.

My estimate of the time frame is as follows:

Getting the pdf, converting to Html, etc: 0.5 day

Setting up, building, tagging :                      20 hrs (3 days)

Completing                                                             0.5

Sending, co-ordinating with the CA, etc     1.o day

Totalling about 5 days – let us say 2 days of a CA earning Rs. 75k a month (CTC) + 3 days of a graduate (earning Rs. 15k a month)

WITHOUT COSTING the price paid for the software, it is Rs. 6000 + 1500 = 7500 + overheads of 7500 = Rs. 15000.

Now if you are doing this as a business, you realise that there will be some additional costs like courier, etc. WHICH WILL definitely happen. Also there will be some marketing and selling expenses for doing ANY business. So logically no sensible company which wants to make money can afford to price these services at any thing less than Rs. 25-30,000 for a reasonably sized company…

However there are companies who are ringing up saying ‘we can do it for Rs. 1500 PER COMPANY…I keep wondering how and why…

What is the credibility of such an offer ( is this an offer at all?)…The questions to ask are:

1. How can you do any work at all for Rs. 1500

2. Can you explain the whole process of converting?

3. Can you give me the CV / cell number of the people doing the work?

4. If you wake up on 25th November and tell me it is not passing through the validator, what should I do?

5. Have you converted any document for anybody in any country and passed it through a validator?

6. I am in Mumbai, you are in Delhi how do I trust that you will not just run away with my money? L O L.

 

1. Have you done

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  1. Good one 🙂 I like your observations and insights Mr. Subramanyam. It’s good to see posts like your which separate marketing hypes from the reality. XBRL is a great step forward from older system, enabling the data to become machine readable, but, its neither easy nor inexpensive, which is only a hype. In addition there is a steep learning curve for its users for the first time around.

    Having said that, the conversion process that you have described is that of an previous generation XBRL technology tools, which are practically completely manual. More advanced, next generation XBRL tools and technology have now arrived that automate tag selection and recommendation , thereby reducing the manual effort and the learning curve substantially. It’s still not completely painless, or inexpensive, but its getting there.

    For a live demo of this advanced XBRL automation technology, you can contact Arun Bhatnagar at arun@softpark.com

  2. Even the auto tools involve human intervention for tag selection. There is prompting yes, but then your input is required. Not easy. Also too many details outside the annual report also they seek…then audit…frankly nobody can do a conversion (including interaction with auditors…Clearly a 30 hr operation * 2k per hour = 60k?

  3. Who knows what will happen to XBRL 10 years down the line and what tools could do to completely eliminate the manual intervention then. Having said that, talking about today or more so talking about the mandates to comply to a regulator.. there are too many stakes involved to completely rely on the automations that a tool could offer. Automation is not a magic wand’s trick, it comes with working deeply with the taxonomies and the filing documents over a period of time. If we see a revised taxonomy coming in the week before last, many tools themselves would have gone under reconsideration, forget automation 🙂 Talking about all the template based tools available in the market..

    If I were a compliance officer of a company and a tool could convert my filing document into XBRL within clicks – I would still ask WHAT and HOW?? I am going to be responsible for it not the company who sold me the tool or the company who did the conversions for me.
    So I better invest in tools only and only if I know XBRL, am confident that I could do it myself and have enough time to look at alternatives if I went wrong somewhere.
    If not tools, I would go for a conversion service provider who could take more time if required, but give me that extra personal attention! After all, its my company who is going to file, so better let me know what the heck is going in that document.

    I have seen many conversion service providers flow charts and process flows. Somehow they assume “ASSUME” that companies would give them a document (word, excel, pdf), they would process it (numerous steps go in here) and pass the XBRL document to the filing company and the process ends..!? How great life would be if the process would be so simple. Subra, people could still not justify 1500 Rs for a conversion! Not even with this process.

    What everybody is missing here is – What about so much of information that companies do not include in the Annual Report. What about ratifications of the amounts the service provider has clubbed and put in some tag.. The filing liability is still of the company – they cannot come and say – Hey! where did this amount come from.. I don’t have it in my report.. I know nothing about it.. not after the filing has been made.
    Its the service providers responsibility to get confirmations about such clubbing..
    If a service provider could somehow be able to create the instance document which has the information about the amounts clubbed, it would be amazing isn’t it. Good for the service provider, good for the company and not to forget, great for MCA. I bet there are so many, so many service providers who do not know how to do that..
    New to XBRL, probably!

    After all, quality is THE FIRST thing that you would ask as a company. Second thing of course would be the ability, flexibility and willingness to create an XBRL document along with the company (and not alone) where the company is confident about each number or word in the instance doc, like they would be while printing an Annual Reoprt.

  4. XBRL has lost his value because of the pricing structure in the Indian market. As per the comment mentioned about the duration of the conversion time is 15-20 hrs. But there are plenty of company is out there to do the same conversion less than this. And also I am disagree with the pricing mentioned many companies are ready to do it with less amount as well.

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