About the FRC Taxonomies Project
Published: 3 November 2023
3 minute read
Objectives of the Taxonomies Project
The over-arching objective is to provide taxonomies which enable the efficient preparation of legally compliant corporate reports in XBRL. The content of the taxonomies is derived from current UK regulations and are designed to be used by companies and entities to meet the relevant legal reporting requirements.
Separately to tags provided to meet legal requirements, the taxonomies should include tags to digitally disclose additional types of information that filers have in their paper reports. Filers may elect to tag these at their own discretion as there is no legal obligation to do so.
The objectives are all relevant and the order of them does not denote a ranking or relative importance. In devising the objectives, the needs of users and regulators are given equal weighting. It should be noted that UK regulators may have differing priorities regarding objectives for the taxonomies, however the following objectives are high level and apply to all regulators.
This means taxonomies which:
- Generate quality structured data.
- Clearly and accurately define the XBRL tags needed to identify specific information.
- Cover financial, non-financial and narrative elements within annual and other corporate reports which is useful for analysis, comparison, or review by existing and potential consumers of XBRL reports.
- Are easy and efficient to use.
- Provide clear and consistent tagged information which can be used effectively by consumers of XBRL information.
The taxonomies should, as far as is practical:
- Be in line with technology available in the marketplace and with relevant regulatory scope and remit.
- Enable tagging of financial statements and other key monetary and numeric data in the main body of financial statements, to ensure compliance with regulations.
- Facilitate tagging, for the purposes of identification, of all textual information which is important to the interpretation and meaning of an annual report and accounts. This means high-level tagging to indicate the presence and scope of particular textual statements, but not necessarily granular tagging of the detailed components of such statements.
- Play a role in encouraging the creation of further taxonomies and the embedding of a digital focus for FRC core policy areas through a combination of innovation, outreach, promotion, and education activities.
It is not practical to define tags to cover every eventuality or item which may be reported in annual reports. However, appropriate techniques, such as the use of analysis tags, enable comprehensive tagging of most financial schedules in accounts without requiring a particularly large number of tags in the taxonomies.
Despite the general aims, particular areas of reporting may not be in scope for detailed tagging where these are:
- Very varied in content and form across companies.
- Highly specialised – either in general or for the sector concerned.
- Not expected to be a high priority for analysis by likely users of accounts.
Areas of reporting have been excluded from detailed tagging if they meet at least two of these criteria.
Many design features of the FRC taxonomies have stood the test of time. Unnecessary change would have an adverse effect on familiarity and efficiency and would serve to increase cost and risk.
Principles of the Taxonomies Project
It is desirable that any new pronouncements of standards and regulations should specify that digital reporting should be facilitated, with the directional aim of regulations, standards and taxonomies being provided simultaneously.
The principles are all relevant and the order of them does not denote a ranking or relative importance. In devising the principles, the needs of users and regulators are given equal weighting. It should be noted that some principles have greater precedence for certain regulatory requirements than others.
The following principles are high level, cover diverse responsibilities and apply to all regulators. They are intended to help the decision-making process when changes are requested to the FRC Taxonomies and should be applied before putting forward any new proposed taxonomy work and, to establish the order of priority of work:
- Promote brevity, comprehensibility and usefulness in digital reports
- Proposed changes are supported by all relevant UK and Irish regulators
- Reduce the burden on companies and those that prepare digital reports
- Reduce the burden on Government (UK and Irish regulators)
- Provide value for money in the public interest & better outcomes for all stakeholders
- Contribute to efforts to tackle economic crime
- Contribute to achievement, measurement, validation, or enforcement of Government objectives
- To maintain high standards of digital reporting with emphasis on continuous improvement of quality.
- To increase transparency
- To lead and influence internationally in digital reporting and simultaneously have regard for the need for comparability that users need to make effective decision making.
- To understand issue resolution and practices in different jurisdictions and account for foreign taxonomy practice.
- To assist preparers of digital reports in clearly understanding their reporting obligations.
- Promote innovation in statutory audit work, corporate reporting and corporate governance.
Membership of the Governance Committee
- Phil FitzGerald, FRC (Chair)
- Alison Rees, Companies House
- Gary Shanahan, DESNZ
- James Fagan, Irish Revenue
- Jennifer Guest, FRC
- Jon Rowden, PwC
- Kim Andrews, Charity Commission
- Leslie Bullock, FCA
- Marshall Matthews, KPMG
- Paul Smith, DBT
- Philip Allen, XBRL UK
- Robert Stenhouse, Deloitte
- Sean Callaghan, EY
- Seema Jamil-O'Neill, UK Endorsement Board
- Tim Lloyd Langston, HMRC
Membership of the Technical Task Force
- Jennifer Guest, FRC (Chair)
- Adam Edgar, Arkk Solutions
- Anahita Roshanfekr, Iris
- Andrew Besley, Thomson Reuters
- Ayaz Mahmood, Sage
- Az Khan, FCA
- Carl Palfrey, Companies House
- Janis Steinmann, Amana
- Kashi Booluck, PwC
- Kim Andrews, Charity Commission
- Luke Agbeko, HMRC
- Nicolas Duvauchel, CoreFiling
- Olivier Cornet, Invoke Software Ltd
- Simon Warren, Caseware
- Siobhan Wilkes, TaxCalc
- Stephan van Niekerk, Ernst & Young
- Thomas Price, CoreFiling