What Is XBRL Filing?
XBRL stands for Extensible Business Reporting Language. Although Extensible Business Reporting Language may sound very foreign and confusing to many, it simply refers to a set of standardised format requirements that companies submit their financial statements electronically to regulatory bodies such as Accounting and Corporate Regulatory Authority (ACRA) in Singapore. Financial statements refer to the balance sheet, income statements, cash flow statements, and other financial statement highlights.
XBRL filing is a regulatory requirement for all companies, with some exceptions that we will mention in the later part of the article. It forms part of a company's annual filing requirements. There are generally four different types of XBRL formats suited to different types of companies.
What Are the Benefits of XBRL Filing?
With a standardised reporting format, XBRL filing results in highly readable, efficient, and accurate financial reporting for companies. This goes a long way in ensuring the integrity of financial figures, transparent reporting, and compliance measures for companies operating in Singapore. Companies can reduce the time and effort spent on manual data entry and ensure a more streamlined process for financial reporting. Efficient filing due to the shift away from manual submission is one of the advantages of having a filing portal.
Enhanced transparency - XBRL facilitates more straightforward access to financial data by standardizing the format, making it more transparent and a more accurate filing process. Such compliance measures are one of the many benefits of filing XBRL and are the collective efforts of all Singapore-incorporated companies.
Another significant benefit would be improved decision-making in the larger business community: For investors and analysts, XBRL provides a structured and consistent format for analyzing financial data, leading to more precise business insights that translate directly to better-informed business decisions. Annual reports may supplement financial analysis, but a structured format offers a higher basis for comparison.
Who needs to file in XBRL format and who is exempted?
All incorporated companies in Singapore, barring specific exemptions, must file their XBRL financial statements with ACRA in this format. This requirement has been in force since November 1, 2007. There were significant reformation and updates during 2013 and 2020. This annual filing requirement is one of the many regulatory requirements in place to ensure the general well-being of the Singapore business environment.
Exemptions from XBRL filing aim to alleviate the burden for certain types of businesses, such as dormant companies and solvent-exempt Private Companies (EPCs). To qualify for this, a company must fulfill the conditions specified in Section 201A of the Companies Act and meet the criteria for being a dormant company, meaning it does not generate any income or is not actively trading. For EPCs, it must be a private company that has annual revenue of not more than S$500,000 for the financial year. Pay special attention to these exemption criteria and their definitions.
For small business owners who are sole proprietorships, XBRL filing is not required.
When is the XBRL Filing Deadline?
Take note of the XBRL filing deadline for business owners, company directors, and managers. There are misconceptions that a seven-month deadline applies to all companies, and we would like to highlight that this is incorrect.
All companies must prepare for their XBRL filing in Singapore after their Financial Year End (FYE). A listed Singapore Company must file within five months of its FYE as part of the mandatory requirement. A seven-month deadline is given to non-listed companies.
Types of XBRL Formats and Their Filing Requirements
There are four distinct XBRL filing formats to accommodate the varying needs of different companies and industries: Full XBRL FS, Simplified XBRL FS, XBRL FSH for Banks, and XBRL FSH for Insurance. The filing options depend on the type of company and its core business activities.
Full XBRL FS
The full XBRL template has around 210 data elements. Companies use it to upload data in their primary statements and selected notes to their FS. Having a good understanding of filing requirements under the full XBRL FS is crucial, as it may be challenging for those performing their first annual return filing.
Simplified XBRL FS
The Simplified XBRL FS is primarily for smaller and non-publicly accountable companies. Instead of 210 data elements, the simplified version comprises 120 elements of a company's financial statements.
XBRL FSH (Banks)
XBRL FSH (Banks) template is specifically for banking financial institutions.
XBRL FSH (Insurance)
XBRL FSH (Insurance) is explicitly suited for Insurance companies and has approximately 80 elements.
Preparing for XBRL Filing
Whether you need to file for simplified XBRL, full XBRL, or other format types, preparing ahead is crucial to ensure a smooth and efficient process. Assuming you are preparing for XBRL filing in-house, beginning the filing with a reliable accounting software or accounting system will be helpful. Some accounting software can now convert quickly to XBRL format, making such accounting systems a handy tool for an in-house team. A good accounting software also will go a long way to reduce any possible accounting issues which may jeopardize the XBRL filing process.
Companies filing XBRL must use BizFinx, ACRA's preparation tool, or other ACRA-approved software for filing.
Understanding the XBRL Taxonomy is key for those navigating the XBRL filing process. Business entities or business owners seeking to report XBRL should familiarise themselves with the available tags, the tag hierarchies, such as parent-child relationships, and the industry-specific tags outlined in the taxonomy.
For most companies, the XBRL filing process is usually outsourced to corporate services providers and accounting firms with specialized experience in XBRL filing. Considering that most of these corporate services providers and accounting firms have multiple clients, the accumulated hands-on experience would be your best bet to reduce key errors and incorrect filing. That is also one of the key reasons why companies that do not have a dedicated team or lack good accounting software are more likely to turn to corporate service providers for compliant reporting and efficient filing.
Late filing Fee
The Singapore Companies Act requires all companies to file an Annual Return with ACRA within 30 days of holding an AGM. A company that is late will be charged an annual return late filing penalty of S$300. The late filing penalties increase as the number of days in default increases. The penalty amount will increase to S$600 after 3 months of delay. Complying with all regulatory requirements and making timely submissions is a key part of compliant reporting and a good financial reporting process.
Conclusion
The XBRL FS filing process is a mandatory requirement for all Singapore-incorporated companies. The main plus point of XBRL will be the ease of communication of business metrics, which is of great value for its standardised format. This mandatory requirement is part of the financial reporting process, and compliant reporting is expected from all types of companies. Depending on the core business activities, each company may be required to file a different set of XBRL templates via the filing portal. Company directors should be mindful of incomplete and incorrect filing and rectify errors should any arise.
Timely submission is essential. Failure to meet the filing deadline is a filing offence and a breach of regulatory requirements as made out by ACRA. Potential penalties such as late filing fees may be imposed on companies that fail to meet this filing deadline. Companies should always seek to maintain good compliance processes as part of regulatory compliance. Company directors may seek a professional third-party provider to ensure efficient filing and reduce errors such as incomplete or incorrect filing.
XBRL filing can be a complex task, especially for those without hands-on experience. Some may view this as an administrative task, but in reality, the accounting profession is still optimal for a better understanding of filing requirements, especially regarding the financial reporting process and key accounting topics. Having reliable accounting software is also a good starting point for generating good financial reports, and accurate mapping features within the accounting software would be a plus in simplifying an otherwise complex task.
For those seeking assistance in XBRL filing, we are pleased to offer them as a service. The extent of filing depends on the company size, the complexity of each company's AGM financial statements, and also the accounting systems used. As a full-fledged corporate services provider, the team at OakTree will work with you to ensure regulatory compliance with your AGM financial statements filing process.
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DISCLAIMER: The views and opinions expressed in this article are those of the author and do not necessarily represent the views and opinions of any individuals or organizations with which the author may be affiliated, either in a professional or personal capacity, unless explicitly stated.
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