XBRL GL FOR TRANSACTIONS

Presented By:

CA. Nirmal Ghorawat

B. Com (Hons), ACA

BACKGROUND

• Businesses issue various Financial Documents for recording their Transactions to counter-party(ies) in paper / closed formats.

• Electronic Data Interchange – transmission of Information “electronically” but not “intelligently” – manual re-keying and / or extraction of data

THE HYPOTHESIS

• Mail Box [Paper, Electronic]

– Receives and sends transaction vouchers –Invoices, Receipts, Payment Vouchers

– Manual Extraction and Re-keying in the Accounting Package

• The Accounting Package

– Receives and sends transaction vouchers –Invoices, Receipts, Payment Vouchers

– Without manual extraction and re-keying

TRANSFORMATION

PRESENT SCENARIO

• Bits and pieces of business information are manually extracted, re-keyed with or without additional pieces of business information and transmitted for onward use.

SELLER BUYER1

2

SHIPPING / LOGISTICS

CUSTOMS CUSTOMS

BANK BANK

EXIM BANK EXIM BANK

INSURANCE

REINSURER

REFINANCE

REFINANCE / LINES OF CREDIT

LETTER OF CREDIT (THROUGH PARTIES)

SETTLEMENT BANK

SAMPLE ECOSYSTEM OF AN INTERNATIONAL TRADE TRANSACTION

Sample List of Documents in an International Trade Transaction

• 1. Pro Forma Invoice

• 2. Purchase Order

• 3. Letter(s) of Credit

• 4. Bills Discounting by Seller’s Bank

• 5. Refinance – Seller’s Bank to EXIM Banks

• 6. Lines of Credit between EXIM Banks

• 7. Certification of Origin (Kimberly Process Certification, etc)

• 8. Invoice To

– Buyer

– Insurance

– Shipper – Multi-Modal

– Customs

• 9. eVerification of genuineness of Documents between

o Banks – Letters of Credit

o Customs – Description / Price of Goods, etc

PROPOSED SCENARIO

• Bits and pieces of business information are extracted by Information Systems from XBRL Documents and re-used with or without additional pieces of business information and transmitted for onward use.

PROCESS

XBRL – GL DOCS

XBRL – GL DOCS

NEW INPUTS

PROCESS CYCLE DIAGRAM AT EACH USER OF INFORMATION

In the words of Eric E Cohen, the founding father of XBRL GL, “pieces of business information can be entered anywhere in a supply chain, flow into a company’s general ledger, then be reported out in any form needed by the company or its trading Partners”

Why XBRL GL?

XBRL Global Ledger Taxonomy is a system andreporting independent, versatile Standard forrepresentation of anything that is found in achart of accounts, journal entries or historicaltransactions, financial or non-financial. XBRL GLprovides an extensible, flexible, multinationalsolution that allows for electronic data exchangeovercoming the limitations of other approachessuch as Electronic Data Interchange (EDI).

What If XBRL GL?

use of XBRL GL for electronic recording andtransmission of various documents created /transmitted in International Trade, traversingmultiple entities and national jurisdictions posesboth an exciting opportunity and a formidablechallenge.

Trade Standards

A host of multilateral organizations and treatiesinfluence the International Trade including theWorld Customs Organization (WCO), WorldTrade Organization (WTO), etc. Theseorganizations have already put in place anumber of measures to regulate, facilitate andharmonize International Trade such as theHarmonized System of Classification andNomenclature for Goods.

Why Regulatory Support?

Around the world, XBRL is driven by regulatoryrequirements (Securities or CompaniesRegulators, Exchanges, Accountancy Institutes,etc) on prepares to report in the uniformelectronic Standard. Similarly, XBRL-GL couldreceive the much needed thrust, if it is driven /recommended for use by a Regulatoryrequirement.

Thank You !

CA. Nirmal Ghorawat

nirmal.ghorawat@hotmail.com