Adv. Rory Voller says that the regulator's new digital reporting tool makes it easy to file financial information.
The Companies and Intellectual Property Commission (CIPC) was the first regulator in Africa to carry out a full-scale implementation of inLine eXtensible Business Reporting Language (iXBRL), which provides major benefits for the preparation, analysis and communication of annual finance statements. CIPC mandated the digital reporting system for all qualifying entities from 1 July 2018.
This is because the Companies Act requires organisations to file their annual financial statements as supporting material to their annual renewal submissions with the CIPC.
“This made things easier for them, but is also extremely beneficial for us,” says Adv. Rory Voller, the Commissioner at the CIPC. “As a regulator, we have to have structured data to perform our monitoring and oversight functions, so this digital reporting feature saves us from having to manually re-key any information into the system.”
Phase 1 of the implementation was successfully carried out and now, phase 2 is underway, with key activities having been implemented by 1 October this year.
“In this second phase, we have taken into account feedback from the market and industry,” explains Rory. “We had banks telling us that what we called revenue isn’t the same thing in their operations, because the sources of income differ. IFRS standards and the Companies Act are not synchronised. So we needed to expand what we mean with the different elements so we can accommodate the reporting of all industries.”
This involved the development of a CIPC taxonomy in line with both the Companies Act and IFRS, the development of a web-based iXBRL file validation service on the CIPC’s e-services portal, and the development of capability to submit iXBRL files from qualifying entities.
Every company is required to calculate a public interest score, which will determine whether the entity must file with the CIPC or not. The scores are calculated as follows:
- A number of points equal to the average number of employees during the financial year.
- One point for every R1 million (or portion thereof) in third-party liability of the company, at the financial year end.
- One point for every R1 million (or portion thereof) in turnover during the financial year, and
- One point for every individual who, at the end of the financial year, is known by the company, in the case of a profit company, to directly or indirectly have a beneficial interest in any of the company’s issued securities, or in the case of a non-profit company, to be a member of the company, or a member of an association that is a member of the company.
The resulting scores will help you to calculate the type of financial reporting required.
Rory says that while there has been significant uptake of the digital reporting tool, there are still companies that remain noncompliant. He warns that in future, there will be a heightened focus on the enforcement of the Companies Act, and that companies that do not comply with the requirement to submit their annual financial statements will be sanctioned appropriately. This will include a certificate of noncompliance, possible legal action and an administrative fine.