Structured digital reporting - 2023 insights
Companies admitted to trading on UK regulated markets are required to produce their annual financial report in a structured digital format (iXBRL) under FCA rules.[1]
This FRC Lab (the Lab) insight report sets outs some areas of focus for companies and suggestions to optimise reporting to meet the needs of investors and other users.
The report is based on a review of 50 reports filed to the FCA’s National Storage Mechanism in this second year of mandatory reporting. The Lab worked on this review together with the FCA's Primary Market Oversight and Listing Transactions Departments within the Market Oversight Directorate.
The FRC also commissioned CoreData Research to survey 160 investment professionals to understand their use of structured digital reports in practice. We found that 36% of investment professionals are using structured reports as a data source alongside more traditional data sources such as data aggregator services and PDFs. This illustrates how structured digital reports are becoming more important to support investor decision-making.
Tagging
Good practice tips
As in previous years (see our 2021 report and 2022 report for further explanation), we recommend companies make sure that:
- custom tags (extensions) are created only when necessary – for example a standard tag is available for ‘merger reserves’ so no extension should be created.
- the accounting meaning of the tags they apply corresponds to the facts reported.
- amounts are reported with the correct sign – most amounts are intended to be reported with a positive sign in XBRL.
- amounts are reported with the correct scale – for example earnings per share of 60 pence should not be tagged as 60 pounds.
- extensions are anchored to the closest wider core taxonomy tag. For example, where possible, extensions in the cash flow statement should be anchored to the closest tag, rather than high-level tags such as ‘cash flows from (used in) investing activities’.
- ‘narrower’ anchors are added when the extension represents an aggregation of standard taxonomy tags.
- they apply the mandatory standard tags such as ‘Principal place of business’ or ‘Domicile of entity’.
We found that filings generally complied with the new requirement to apply text block tags to the notes to the financial statements. However, we recommend companies look out for issues with the formatting of the text and numbers that affect the usefulness of the data, which is discussed further in the design section below.
In addition, the FCA found that, during 2023, 90% of tagged report rejections in their submission system are still due to basic errors, including an incorrect file format, naming and structure. For example, some companies submit a report package that has been compressed twice (‘double zipped’) or omit files or folders required within the package.
Design and usability
PDF-to-XHTML conversion remains popular
We found that the human-readable layer of most reports continues to be produced by converting PDFs to XHTML. Companies may want to consider using a ‘native XHTML’ approach instead, to achieve a more accessible and responsive design (see Embracing XHTML as a web-based format in the Lab’s 2022 report). We are seeing more companies voluntarily adopting the latter approach.
To ensure the usability of text-block tags, companies may want to check with their software or tagging provider whether their report meets the requirements set out in the ESEF reporting manual, which applies to UK reporting through Primary Market Technical note TN 507.1. Paragraphs should be presented in the correct order and the spaces between words should be conserved within the content of text-block tags– for example “equipment is depreciated on a straight-line basis” should not become “equipmentisdepreciatedonastraight-linebasis”.
Process
Company ownership is key
Financial Conduct Authority“We would remind issuers that they are responsible for all information drawn up and made public under the DTRs. We, therefore, would expect issuers to devote the same level of care and attention to their XHTML AFRs as they do to their AFRs in PDF or printed form. ” FCA Primary Market Bulletin 37
Companies are responsible for the quality of the report even when the tagging process is outsourced. With this in mind, companies may want to:
- improve their understanding of the tagging requirements to enable appropriate review of the work of any service providers more effectively.
- ensure technical accounting staff who have familiarised themselves with the taxonomy are involved in the tag selection. Reviewing peers’ tagging on filings.xbrl.org may also be helpful.
- do some final spot checks in an inline XBRL viewer before submission. For example, it may be helpful to make sure that the human-readable layer corresponds to the latest, final version of the report.
- use the FCA’s test functionality and consider any resulting warnings and calculation inconsistencies. Although these are not always relevant, they often are – for example, calculation inconsistencies under the new calculation specification 1.1 are helpful to identify summation errors.
- seek voluntary assurance – the FRC has adopted ISAE (UK) 3000 to support the delivery of these voluntary engagements.
Companies may want to familiarise themselves with the guidance on submission to the FCA, including on file naming and structure and the filing process, as well as the Lab’s 2021 report and 2022 report
As a reminder, FCA rules require companies to file their report to the National Storage Mechanism within 4 months after the end of the reporting period.
Why it matters
Growing investor use
The FRC commissioned CoreData Research to survey 160 professional investors (100 sell side and 60 buy side) to understand their use of structured digital reports in practice.[2]
Chart 1 - Sources of company-level financial data (multiple answers allowed)
| Source | Percentage |
|---|---|
| PDFs from company websites | 78% |
| Commercial data aggregator services | 81% |
| Spreadsheets from company websites | 63% |
| Structured data from reports in XBRL format | 36% |
| Other | 6% |
Over a third of investors surveyed are now using XBRL-tagged reports as a source of company financial data alongside other more traditional data sources such as data aggregators or PDFs from company websites. Most of those who used XBRL data said they did so occasionally. There was a higher take-up among sell-side professionals (48%) than buy-side professionals (15%).
Among those who used XBRL data, 77% retrieved it from company websites, rather than repositories such as the National Storage Mechanism. Therefore, we would encourage companies to provide on their website an FCA-validated version of their structured report with an Inline XBRL viewer, in addition to the zip file.
| Name | Structured data investor survey 2023 |
|---|---|
| Publication date | 16 January 2024 |
| Format | PDF, 354.6 KB |
This report has been prepared by the Financial Reporting Council Lab (the Lab). The Lab focuses on innovation and best practice but has no regulatory role and any suggestions in the report should not be considered a requirement. The FRC supports UK digital reporting by providing taxonomies to report to HMRC, Companies House, FCA and Irish Revenue. The FRC is not the lead regulator for digital reporting and companies should consider interaction with any guidance provided by such regulators.
Footnotes
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[1]
In July 2023, the FCA updated its rules and guidance to introduce DTR 4.1.15-23 and Primary Markets Technical Note 507.1, which replace the UK version of the EU Transparency Directive's regulatory technical standard for the European Single Electronic Format.
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[2]
Investors were only included the sample if they were regular users of company financial data and were involved in investments in UK companies.