UK authorities set out expectations on structured reporting
“Digital data is a key component of a well-functioning capital market,” say the UK’s Financial Reporting Council (FRC) and Financial Conduct Authority (FCA). Mandatory structured reporting is around the corner for the UK: from 1 January 2022, certain companies will be required to submit their annual financial reports (AFRs) in the Inline XBRL-based European Single Electronic Format (ESEF).
The FRC have therefore written to company CEOs in advance of the coming change to remind them of their obligations and set out expectations on quality. “Electronic data for thousands of companies will become available for automatic extraction, analysis and comparison. However, the data will only be useful if it is of high quality,” they note. Companies will need to devote further and continuing management and operational resources to ensure they meet the requirements.
“So far, we have had several issuers taking advantage of the voluntary approach to file their AFRs. It is proving to be a very valuable learning experience, particularly where tags have been used and errors and/or warnings have been generated,” continues the letter. For more information on quality issues in digital tagging, it directs companies to a recent Financial Reporting Lab report providing support on the transition to structured reporting, as well as information from XBRL International. Our filings page and accompanying blog series offer evidence-based insights on common errors and pitfalls to avoid in ESEF filings.
“We also strongly encourage issuers to take advantage of the opportunity to file accounts in the new electronic format voluntarily to help ensure they are familiar with the requirements and the submission process before the mandatory requirements are in place,” they add – advice we can certainly get behind!