Press release: Digital financial reporting of AFS using XBRL
CIPC implemented and mandated the use of XBRL as a digital reporting mechanism.
CIPC mandated XBRL
CIPC implemented and mandated the use of XBRL (eXtensible Business Reporting Language) as a digital reporting mechanism as from 01 July 2018. The legal and strategic mandate for submission of AFSs to CIPC is prescribed by the Companies Act, Act No.71 of 2008 as amended. Section 30 and Regulation 30 prescribe requirements for Annual Financial Statement submissions and the role of CIPC in this regard. Regulation 30 (5) (a) specifically prescribes that the Commission must establish a system to review AFSs with the objective of monitoring compliance with the Act. XBRL was mandated because the technology allows automated validation, in-depth analysis, and reporting on large numbers of financial statements that the CIPC need to process annually in support of the CIPCs role a regulator.
Various entity types subject to XBRL
There are currently over 2 million registered active companies in South Africa. A sub-set of these companies are required to submit Annual Financial Statements (AFSs). These include:
- all public companies;
- state-owned companies;
- private companies with a 350 Public Interest Score;
- private companies whose Public Interest Score is at least 100 and whose AFSs were internally compiled;
- non-profit companies incorporated directly or indirectly by the state, an organ of state, a state-owned company, an international entity, a foreign state entity or a foreign company; or primarily to perform a statutory or regulatory function in terms of any legislation, or to carry out a public function at the direct or indirect initiation or direction of an organ of the state, an international entity, or a foreign state entity, or for a purpose ancillary to any such function;
- any profit or non-profit company if, in the ordinary course of its primary activities, it holds assets in a fiduciary capacity for persons who are not related to the company, and the aggregate value of such assets held at any time during the financial year exceeds R5 million; and
- companies whose Memorandum of Incorporation prescribes an audit of their annual financial statements.
The original implementation of XBRL on 01 July 2018 only included financial reporting according to the IFRS (International Financial Reporting Standard), since IFRS is applicable to the majority of business entities. The CIPC annually runs a project to stay abreast with the latest IFRS specifications as annually released by the IASB (International Accounting Standards Board). As from 01 October 2021, it also became mandatory for some State Owned Companies and Municipal Owned Entities who prepare AFSs according to GRAP (Generally Recognized Accounting Practice) and subject to the Public Finance Management Act (PFMA) or Municipal Finance Management Act (MFMA) to file using XBRL. GRAP is maintained by the ASB (Accounting Standards Board of South Africa).
A new focus on service delivery
By introducing the GRAP mandate, the CIPC extended its regulatory role to the context of service delivery rather than profit only, as applicable to IFRS. GRAP aims to promote accountability by ensuring transparency and consistency in the handling of funds by public and municipal entities.
Co-operatives added to the mix
During 2022 the CIPC is making another leap forward by extending digital financial reporting to Co-operatives. Co-operatives are businesses where a group of people get together voluntarily to address their common needs. A Co-operative is a distinct form of enterprise that provides services and/or products to its members. As from 01 October 2022, Co-operatives who currently file audited AFS to CIPC, will also be required to file AFSs via XBRL. On 01 April 2022 a pilot project was launched to allow voluntary filing of AFS in XBRL by Co-operatives for testing purposes until the mandate comes into effect on 01 October 2022.
The CIPC introduced XBRL in partnership with technology service providers. To assist companies with compliance, the CIPC established a panel of recommended Software Service Providers (SSPs). These are 3rd party companies who developed specialised software to convert AFSs into the XBRL format required by the CIPC. A list of recommended service providers is available on the CIPC website. Some SSPs provide relevant simple and affordable solutions for small companies while others provide for sophisticated software which offers much more that provisioning of XBRL and may only be applicable to large entities.
The CIPC provides comprehensive information on XBRL on the CIPC website to provide guidance and clarity of AFS filing. For a complete list of documentation, please refer to the “iXBRL Programme” page on https://www.cipc.co.za/.