NEW DELHI: The government will allow companies to use their own accounting terms in the new reporting format from the next fiscal year, accommodating an industry request that the new rule be relaxed to make data comparison easy for shareholders.

At present, there is a difference in the way a firm's financial data is presented in the new reporting format, known as eXtensible Business Reporting Language (XBRL), and that available to shareholders through the annual report, which makes data comparison and analysis difficult.

"Companies will be free to report their financials and stick to their own accounting definitions," a senior MCA official told ET, requesting anonymity. XBRL was introduced earlier this year to make financial filings uniform.

With the relaxation in the rule, companies will be able to retain their balance sheet version of definitions and accounting elements known as 'extensions' in the XBRL format. This implies that the ministry of corporate affairs (MCA) will accept headings used in annual reports that are different from those in the XBRL format, such as 'sources of funds'.

There are several such elements that are part of the XBRL format but not of annual reports. For example, in the new format, the companies must club 'trade receivables' and 'unbilled revenues' under one head of 'trade and other receivables'. But these two are added to show gross amount under a single head. Experts say this can also lead to loss of information.

"This can be a serious impediment to comparability and analysis," said Infosys CFO V Balakrishnan. However, the ministry is considering allowing 'extensions' only in some segments of the balance sheet, such as revenue or expenditure.

"Once companies get complete freedom to define their own elements, it will be easy for them to conceal information. This obviously will have huge tax and cost implications," MCA joint secretary Avinash Srivastava said. The official quoted earlier said, "This will allow us to keep a check as well as give the companies more freedom in business reporting."

The government has made it mandatory for all listed companies and their subsidiaries with paid up capital of Rs 5 crore and above, or a turnover of Rs 100 crore or above, to file their financial statements in XBRL format from July this year.

"Every document would be different and therefore will have to be reviewed separately along with their dictionary. The process will be hugely cumbersome for the ministry," Srivastava added. Companies usually report their balance sheet in different ways.

For example, for the year ended March 31, Tata Consultancy Services disclosed expenses in terms of their nature and had a separate expenditure heading called 'employee costs'.

On the other hand, Infosys did not disclose 'employee costs' and instead stated expenses by function instead of nature. "If extensions are allowed it will enhance comparability and enrich the quality of the XBRL financial statements," Balakrishnan said.

XBRL is a global standard for exchanging business information using an electronic glossary of business and financial terms known as taxonomy. Under this, companies report their financial statements using XBRL syntax as an .xml file instead of uploading their balance sheets in .doc or .pdf format.