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April 2010 - Accounts production RIP? By Simon Hurst

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17th Jan 2007
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Filing accounts online, in an electronic format, could mean that there is no need for individual accounts production packages to provide any sort of accounts formatting facility for the majority of limited company accounts.

Instead the accounts will be produced as an electronic file which could be formatted according to one globally available 'style sheet', probably residing on the Companies House website. Of course this won't really lead to the total demise of accounts production as we know it, there will also be the need to produce types of accounts that are not covered by the Companies House filing requirements – such as unincorporated businesses and larger companies.

There will still be the need to produce management accounts and some clients will want to see their figures in some other format than that provided by Companies House. However, online filing will entail radical change in the systems accountants use to produce their clients' accounts and a lot of the functionality that is the basis for the formatting section of current accounts production systems may no longer be required. But just how imminent are these changes likely to be?

When?
The Carter Report set HMRC the following deadline for April 2010: "Online CT filing and use of XBRL required for returns due after 31 March 2010. Electronic payment of CT also required… Small employers required to send PAYE in-year forms online."

Looking slightly further ahead, 2012 should be the "date by which HMRC should aim for all business, and all IT literate individuals, to be filing returns online." However, it is not just HMRC that is moving rapidly towards online filing. The Carter Report also stressed the need for HMRC to work with Companies House to provide a 'joint filing facility' so that "companies and agents only have to submit the same information once". The relevant recommendation in the report was "that HMRC should defer requirements for online filing by companies to 2010 and that they should aim to provide a joint filing facility before that time".

Companies House is already making progress towards this goal and won an award from the British Computer Society for the management of its eAccounts project and from Accountancy Age for best use of the internet by the public sector'. Currently dormant company Accounts and Audit Exempt Abbreviated Accounts can be filed using individual PDF templates or via accounts production software using XBRL. This already encompasses the majority of company accounts filed with Companies House and the intention is to add further accounts types relatively quickly.

Why?
It is of enormous benefit to any organisation that needs to process large quantities of financial data to be able to read that data directly from a computer file, rather than to re-key it from a paper document. Companies House and HMRC are particularly voracious consumers of such data and consequently their interest in implementing electronic filing systems quickly is no surprise.

How?
This is not intended to be a deeply technical treatise on the subject of XML and XBRL – the document technologies at the heart of the electronic filing projects - but instead a simplified introduction to how the online filing technology works in practice.

Current document technology allows a file to contain the information required to both format the document into a display or print that a human can read, and to enable a computer to extract the data and interpret it. Behind the plethora of irritating acronyms, such as XML and XBRL, is a very simple and straightforward concept – that of 'tagging' the data within a file. Instead of the figure for say, legal costs, being a group of unidentified numbers lurking somewhere in a mass of other figures and text, the legal costs total will be held as a separate and identifiable object within the document. It will be marked by a tag that holds information about what the total is and how to deal with it.

To continue our simplified introduction, our accounts production package will no longer need to take our trial balance figures and apply complicated logical rules in order to create a properly formatted set of accounts. Instead, the figures and other relevant information will need to be formed into a properly tagged XML document by reference to each code's nominal account or other identifier. This XML document can then be sent to Companies House or HMRC in a prescribed way. Their systems will then be able to use the tags to extract the data for processing with no need for printing and re-keying, and also to 'render' the document into human-readable form for anyone who needs to refer to the 'visual' document.

2010 isn't that far away. On 11 December last year, the IT Faculty of the ICAEW, in association with XBRL UK, hosted an XBRL implementation seminar. This event brought together representatives of nearly all the main providers of software to firms of accountants, key project leaders from Companies House and HMRC and other technical experts. The message from HMRC and Companies House was very much that the sooner the software suppliers started implementing the changes required to support online filing, the better. Perhaps it's time to start asking accounts production and tax software providers, or potential providers, how their XBRL plans are going.

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By Malcolm Veall
08th Feb 2007 09:52

Still Need Accounts
Simon,

You seem to be suggesting that there will somehow be a way for data that constitutes a company's annual accounts to magically go from a ledger into a machine readable format that no human hand will touch or human eye will look at. Accounting standards will not have gone away so how will we accounts producers consider and clients approve the disclosures that are required if a normal formatted set of accounts is not produced, even if the government agancies only have XDRL data.

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By hmyers
09th Feb 2007 15:56

easy XBRL Accounts filing at Companies House NOW
I don't know how the accounts production software firms are getting on with the changes to support online filing, but we - a small practice - have developed our own stand alone desktop filer for easy filing of abbreviated accounts at Companies House and have submitted numerous sets of accounts without problem. The system has now been approved by Companies House. Once a company is set up with the previous year's (paper-filed) accounts data, it takes about 2 or 3 minutes to enter the current year's balance sheet totals/notes, do an automatic pre-validation of the XBRL file, and submit to CH. Responses (acceptance or rejection) from Companies House are also easily handled. We have put a front-end on it so it can be used by anyone (no need to grasp XML or XBRL, templates or anything technical). If anybody wants to try it out they should go to http://uk.geocities.com/[email protected]/index.htm

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