9th September 2011
Dear Forum Members
This is regarding XBRL filing made mandatory for certain type of companies by the Ministry of Corporate Affairs.
I would like to categorically state that I am not against XBRL. I am willing to abide by whatever regulations stipulated by the ministry concerned.
However the following are my concerns that needs to be addressed by the Ministry.
XBRL is too much technical. I presume that a lay man like me will not be in a position to understand or learn the same. This fact should have been taken into consideration by the Ministry or Government. Filing of Annual Accounts all along these years have been a very simple issue which is becoming too complicated because of the moves of the Government / Ministry. This will also increase the cost of compliance for the companies leading to violation of non-compliance of filing the Accounts. Small companies will be seriously affected by this move.
When the Government wants the documents to be filed in a prescribed format (viz XBRL), it is the fundamental duty of the department concerned to provide the requisite platform free of cost. Entire software should be provided by the department. For example – Income Tax Department is providing the software in Excel format. Any layman can fill up the form. Upon filling up the form, we can easily validate and convert the same into XML format and upload the same into IT website. NSDL is providing the requisite software free of cost for efiling TDS returns. Likewise Excise, Customs and Sales Tax Departments are also providing the platform / software free of cost. Most important is no Third Party is involved in such cases.
(Note : I am an ordinary B.Com graduate and do not know how to file IT return for companies before the year 2006. But ever since the IT department introduced online filing in 2006, I learned the same very easily and quickly. Hats off to the Income Tax Department for its simple and best approach. At present I am filing IT returns for about 10 companies every year without any difficulty)
In my opinion MCA is indirectly compelling the companies to buy software from private software companies. Who knows there may be one more scam involved in this issue. These private software companies have already started showing their business face by announcing differential pricing on their products. Further every year MCA would be making changes in filing requirements. The companies concerned have to depend on their software suppliers to provide free upgradation. Some companies will charge for this or will charge an Annual Fees for this. Why should we pay for this and that too to a private software company, to comply with a law that is enforced by the government.
I agree that Annual Accounts is a public document that could be verified by any person after paying the prescribed fees and upon inspection with the department concerned (ROC). However taking the support of an third party company (developer of software) for filing the annual accounts will seriously jeopardize the information being provided to them at the time of filing of the documents. These software companies could exploit such information and can even sell the same in the market who are looking for such information. Confidential information could be shared by them in the market and the companies concerned shall stand to lose competitive information.
If the Ministry is not capable of developing the software on its own then it should have called for tenders and roped in a software company to develop the same on behalf of the ministry. The said software or package should be provided in MCA website free of cost to enable the companies to download the same and for preparing the documents for filing. The intellectual property of the software developed by the software company should be owned by the Government and not by the company developing the same. The Ministry should also enter into a confidential agreement with the developer, preventing them from using any information that these companies receive during the course of developing the software.
I am greatly surprised that no professional body or professional person involved or companies concerned have taken this matter to a Court of Law for obtaining a stay on the approach of the Ministry. (Repeat Stay on Approach of the Ministry and not on Implementation of XBRL filing). I presume that they may be worried that their stake involved would be in peril if they take on the powerful government. In my opinion this is a fit case for legal scrutiny.
I look forward to the members to share their views.
With regards
R. Muralidharan
