WILL THE FILING OF CIPC ANNUAL RETURNS AND ANNUAL FINANCIAL STATEMENTS IN THE XBRL FORMAT EFFECT MY COMPANY FROM 1 JULY 2018?
The Companies and Intellectual Property Commission (“CIPC”) has introduced a new way of lodging the Annual Financial Statements (“AFS”) which must accompany the Annual Returns of a company.
At present CIPC receives all Annual Financial Statements in PDF format and physically analyses them on a one-by-one basis. This manual process has been slow and it doesn’t allow the CIPC to compare the statements of different companies to determine trends within sectors, or even the economy as a whole. This has led them to initiate a new way of the CIPC annual returns and AFS with effect from 1 July 2018.
What is eXtensible Business Reporting Language (“XBRL”)?
XBRL reporting is currently being used in over 50 countries around the world and is a new way of supplying your AFS. In lay-man terms it can be described as a change from film photography to digital photography, paper books to digital books. Having financial statements in an XBRL format means the Department of Trade and Industry, through CIPC, can use the data, share it, and also analyse it on a clearly defined digital platform.
The benefit of using XBRL will be to eventually provide one common standard of reporting to all regulators in South Africa and further resulting in the elimination of duplications and differences in reporting. By using XBRL, companies and other producers of financial data and business reports can automate the processes of data collection.
Who does it effect?
There are approximately 1.8 million companies registered at CIPC. The implementation phase will commence on 1 July 2018 and it will require certain types of companies to submit their financial statements in the XBRL format.
In terms of Section 33 of the Act read together with Regulation 28, 29 and 30 of the Companies Regulations of 2011, the following entities must submit their AFS in XBRL with their annual returns:
- Companies whose Memorandum of Incorporation (MOI) or Articles of Association requires the auditing of their financial statements;
- Private or personal liability company, in the ordinary course of its primary activities, holding 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;
- Private or personal liability company that compiles the AFS internally (for example, by its Financial Director or its owner) and that has a Public Interest Score (“PIS”) of 100 or more;
- Private or personal liability company that compiles AFS by an independent party and that has a PIS of 350 or more; and
- Private or personal liability company not managed by its owners, which opted to have its AFS audited or voluntarily included audit as part of its MOI, may be subjected to an independent review if:
- It compiles its AFS internally and its PIS score is less than 100; and
- AFS compiled independently and its PIS is between 100 and 349.
These companies are from 1 July 2018 required to have tagging software in place to produce the AFS in XBRL format, namely the iXBRL format version 1.1 within a single XHTML file. If a company is not able to provide the file in that format, they will have to have an outsourced partner who can do so on their behalf.
The submission of the AFS for Close Corporations will also be required to comply with the XBRL requirement from 1 July 2018, subject to the same requirements as applicable to the other entities stipulated by the Act.
What is the XBRL tagging process?
The XBRL tagging process takes place in distinct stages:
- AFS are uploaded to the application;
- The application applies as many tags as possible from a degree of intelligence existing in the application;
- The files are reviewed and any ambiguities corrected;
- The resultant XBRL file is then subject to a validation check, to ensure it will meet the validation requirements of the CIPC.
For the initial implementation of XBRL on 1 July 2018, only the data elements as defined in the minimum requirements are to be tagged.
CIPC will still require signed-off AFS’s, but such will not be required to be uploaded as signed-off PDF files anymore. Only the iXBRL AFS data will be required to be submitted to CIPC and qualifying entities would still be required, as determined by the Act, to maintain signed off AFS for a period of 7 (seven) years, whereby CIPC may at any point request access to the audited AFS.
Will the AFS be available to the public?
Financial reports filed with XBRL to CIPC will not by default be available to the public, however, anybody can submit a request to CIPC to see the financials of any entity. Data sharing is therefore not part of the current XBRL programme, but the CIPC foresee that they will make this available for consumption in the future.
What happens if my Company does not comply?
Non-compliance of entities that contravenes the laws in terms of Section 175 of the Act, will be subjected to the following actions being taken against them:
Failure to submit the CIPC Annual Returns – The deregistration of the entity and penalties may apply; and
Failure to submit AFS – An investigation will be conducted. After investigation a compliance notice will be issued mentioning a deadline date to comply with. Further failure to comply with the deadline date will result in a fine which may be issued or formal prosecution may be investigated.
Can Kilgetty assist my Company?
Kilgetty is able to assist all Company’s with the filing of the CIPC annual return and converting the AFS to the iXBRL format as we have partnered with one of the approved CIPC software providers that meet the CIPC requirements. Our partner is known for its quality and cost-effectiveness, strives to provide cutting-edge Regulatory Reporting Technology across the world and has prepared more than 50,000 iXBRL returns.
What will it cost me to convert the AFS to iXBRL?
The cost to convert the AFS to iXBRL through our partner will be based on the number of pages and the input format for each set of AFS as follows:
|Conversion costs to XBRL|
|Revenue||Cost (ZAR ex VAT)|
|Revenue below R20-million||R3 500|
|Revenue of R20-million and above||R4 750|
The above mentioned fee excludes VAT and our normal fee to lodge the CIPC annual return as well as the fee payable to the CIPC as this fee is calculated on the Company’s annual turnover.
Contact our office
Please do not hesitate to contact our office should you require any assistance with the conversion of your AFS to XBRL and/or the lodging of the CIPC annual return.
Are your Annual Financial Statements Audited or Independently Reviewed?