What is XBRL?
XBRL stands for eXtensible Business Reporting Language. It is a global framework (XML based language) mainly used for communicating and exchanging business information globally on the internet. XBRL is currently the international standard used by most companies worldwide for digital business information and is commonly used in lieu of physical paper documents. It can be used to manage many financial statements such as business registrars, financial statements, revenue reports, and other accounting related documents.
In Singapore, the Accounting and Corporate Regulatory Authority (ACRA) requires business owners and or companies to file their financial statements in such format to meet the requirements of XBRL filing. All incorporated companies in Singapore have to follow ACRA’s guidelines and comply with them in order to avoid penalisation.
The XBRL ACRA filing requirements and template usage are different for different types of companies, so companies will need to check carefully for any changes they might need to correct. In general, all companies need to adhere to the new XBRL ACRA filing requirements from 1 January 2021 onwards. If you’re unsure if your company needs to adhere to XBRL ACRA guidelines, check this guide for more information.
What is ACRA?
The Accounting and Corporate Regulatory Authority (ACRA) is the statutory board which is under the jurisdiction of the Ministry of Finance (MOF) in Singapore. They are the main regulators of business entities, and are the organisation in charge of registering businesses in Singapore. For more information on registering a business with ACRA, this article explains clearly how the process of business registration works.
In addition, ACRA also oversees the financial reporting of companies annually. In 2020 it has revised the XBRL filing requirements for all companies, in order to improve the productivity of filing financial statements.
Introduced in 2007, XBRL ACRA serves to promote effective business communication among companies, business owners and the government authorities. Singapore is one of the countries increasingly using XBRL filing for their financial systems, amongst other major finance hubs in the world such as Japan, China, and the United States.
How does XBRL work?
XBRL uses the XML language to create distinctive identifying tags which provide all the necessary information related to the item tagged. All these tags are known as ‘Taxonomy’, which are accepted and used across a region. In Singapore, all financial statements in XBRL follow the ACRA Taxonomy.
The ACRA taxonomy is closed, which means it does not allow others unauthorized by ACRA to create their own specific definition for a tag and establish relationships between tags. There is still a level of flexibility as ACRA allows some customizations, such as creating a unique label for your company.
In addition, data analysis tools or any other analysis software can process the company’s data efficiently and retrieve all the necessary financial information about them for further usage. One example will be ACRA’s free data analysis tool, which requires financial reports filed in XBRL ACRA format to analyse your company’s performance.
There are many helpful tools out there in the market that uses the company’s financial statements in XBRL format and translates them into efficient and practical data.