Calculation inconsistencies in financial reporting by Companies

The day before yesterday,

There was a press release by our company(IRIS Business Services Pvt Ltd) titled

"Sorry wrong number: Study finds financial results of 209 listed Indian companies don’t add up"

The report includes findings from the XBRL based data base, which we at IRIS, have created of about 1000 odd listed company,

Which includes financial statements & schedules to financial statements of the companies.

The findings were astounding.

There were as much as 209 companies whose numbers dint add up. i.e. in other words, there were calculation discrepancies in "Audited" financial statements of the companies.

For one of the company, there was an error of as much as Rs.216 Crores (Yes I am saying Rs.2.16Billion) in the balancesheet of the company..

Does that mean there are frauds in those companies... Our CEO Mr. Swaminathan in the says that he refuses to describe this as fraudulent reporting. “I would say that the companies and auditors should have paid more attention. But while I agree that there could be the odd case where
some companies may have fudged their accounts deliberately, I would not pin the fraud label on all of them,” he said. “In fact, we are contacting each company individually to point out the problems to them which they may rectify if they so desire,”

Outlining the approach adopted by team IRIS, Mr. Swaminathan said that the errors were discovered in the course of creating India’s first ever corporate fundamentals database in XBRL. “You convert the entire data set into XBRL and you will see all these red flags immediately”

This has been one of the major benefits of XBRL, if the numbers dont add up, it will immediately flag the errors, so as to make the company or the analyst known about it.

The funda of XBRL is like this, Every line item on the face of financial statement is attached a tag (like a barcode) for that piece of value, after the tagging is done (Barcoding as one may call) the ordinary data becomes the machine readable data.

Hence when a machine understands the data, it can easily verify it, & the users can easily slice & dice the data as per their wishes.

In short, when the data is XBRLised, the same can be used by Analysts also, they can set in valuation models or investment models & get the desired output in their ways since the data is machine readable.

For referring the press release in detail, visit the below link

http://www.myiris.com/newsCentre/storyShownew_opt.php?fileR=20090514141554173&secID=fromnewsroom&secTitle=From%20the%20News%20Room&dir=2009/05/14

• To know more about XBRL, benefits, uses & how it can be adopted

• If you are interested in adopting XBRL in your company, or want data in XBRL format.

• Or for any other query on XBRL

You can mail me @

punya.trivedi@irisindia.net

IRIS Business Services (Pvt) Ltd is one of the leading XBRL technology company in India.

To know more about IRIS, visit  http://irisindia.net/