Ever since the eXtensible Business Reporting Language (XBRL) was introduced for improved access, transmission, and comparability of financial documents, the digital format has been mandated by a growing number of regulatory bodies. XBRL implementations worldwide are growing at a pace that makes them difficult to track. The last known number is 200 XBRL reporting mandates in more than 60 countries.
We’ve taken it upon ourselves to bring you snippets of about 10 of the most recent developments in the XBRL/iXBRL space. In the coming days, we will be dissecting some of these implementations and offering deeper analysis and insights.
US mutual funds and exchange-traded funds classified as open-end will now have to prepare more concise and visually appealing annual and semi-annual reports for their shareholders. The US Securities and Exchange Commission (SEC) has adopted a final rule on tailored shareholder reports by the funds which also requires them to tag the reports using Inline XBRL. The rule is designed to highlight key fund information, especially for retail investors, in a format that makes their evaluation more efficient. The new rule will be effective 60 days after it is published in the Federal Register. The SEC has allowed the open-end funds an 18-month transition period for their compliance with the final rule.
2. EU Companies to Report Sustainability Data in XBRL under CSRD
With the EU Parliament adopting the Corporate Sustainability Reporting Directive (CSRD), companies in Europe will have to file sustainability information in the Inline XBRL format from 2024. The CSRD improves upon the current EU sustainability requirements under the Non-Financial Reporting Directive (NFRD). CSRD requirements will apply to nearly 50,000 companies in the EU, whereas NFRD requirements applied to only around 11,000 companies. Experience of complying with the European Single Electronic Format (ESEF) regulation will come in handy for most companies as CSRD will only mean an extension in the reporting requirements to sustainability information. Meanwhile, the European Financial Reporting Advisory Group (EFRAG) has approved the final version of the European Sustainability Reporting Standards (ESRS), which will be used for CSRD reporting.
3. EFRAG Seeks External Help Creating XBRL Taxonomy for ESRSs
The European Financial Reporting Advisory Group (EFRAG) recently called for tenders from specialists who would develop an XBRL taxonomy for the first set of European Sustainability Reporting Standards (ESRSs). The XBRL version of these standards will be used by companies to comply with the Corporate Sustainability Reporting Directive (CSRD). The attempt to create a taxonomy is in keeping with the goal of digitizing ESRS disclosures and collecting the data in a machine-readable format that facilitates greater access and comparability right at the outset. This will further the use of the European Single Electronic Format (ESEF), which EU companies have been using for annual financial disclosures since 2020.
4. Ireland’s Revenue Updates iXBRL Manual to Include Tagging Errors
Irish companies are required to submit financial statements in Inline XBRL as part of their corporate tax returns. Ireland’s tax and customs authority, Revenue, has updated its iXBRL Tax and Duty Manual to add a new section on the iXBRL tagging errors most commonly seen in digital financial statements. Currency, sign and scale errors, as well as other general errors and reminders, are seen in the new section. The manual explains: “Generally, tagging should reflect what can be read in the ‘human-readable’ Financial Statements. While most iXBRL submissions achieve this, some contain tagging errors which can cause large distortions of the financial information that Revenue relies upon when assessing an entity’s tax risk. In turn, such distortions can lead to compliance interventions such as an audit.”
5. Irish Central Bank to Collect Resolution Reports in XBRL from 2023
From January 2023, investment firms and credit institutions in Ireland will have to submit their Bank and Investment Firm Resolution Fund (BIFR) Forms in XBRL instead of Excel. The Central Bank of Ireland (CBI) established the BIFR Fund in 2015 to provide for resolution in case a credit institution or investment firm fails. CBI uses the Fund to calculate contributions from each financial institution. The Fund excludes large institutions which fall under the scope of the EU’s Single Resolution Board. Firms may submit their BIFR Forms through the CBI’s online reporting system. A preliminary XBRL taxonomy for the 2023 BIFR contribution period has been made available.
6. UK’s Financial Reporting Council Releases 2023 XBRL Taxonomies
The UK’s Financial Reporting Council (FRC) has published its 2023 Suite of Taxonomies, which introduces changes to all FRC taxonomies – UK IFRS, FRS 101, FRS 102, UKSEF, Irish Extensions and Charities. Apart from the updated taxonomies, the suite contains taxonomy documentation, supporting documents, key information sheets and release notes. For Companies House reporting requirements, the FRC has introduced new or improved tags and guidance for initial and interim reporting, and for medium-sized companies and filleted accounts. The latest version of the UK Single Electroncic Format (UKSEF) Taxonomy uses an XBRL feature allowing companies to file a single report to multiple regulators.
7. XBRL US Urges EPA to Collect GHG Emissions Data in Digital Format
XBRL US, the not-for-profit working towards digital business reporting in the US, has written to the Environmental Protection Agency (EPA) urging the collection of greenhouse gas emissions data in the XBRL format. Responding to the EPA’s request for feedback on GHG emissions reporting, XBRL US said XBRL would ensure access to clean, consistent, and detailed data to more effectively track progress towards common aims. XBRL US further said the use of the Legal Entity Identifier (LEI) for submitting GHG emissions data would further help associate parent companies with their subsidiary facilities. XBRL US has issued a similar response to the Commodity Futures Trading Commission (CFTC) based on a request for information on climate-related financial risk.
8. Danish Human Rights Body points to Need for XBRL Data Repository
A discussion paper by the Danish Institute for Human Rights points out to the need for a central repository of machine-readable reports to facilitate a ‘big data’ approach to sustainability and human rights information. The discussion paper mentioned a project that sought to carry out an algorithm-based analysis of human rights issues from corporate reports in the Global Reporting Initiative (GRI) Sustainability Disclosure Database. One of the constraints the research encountered was difficulty to download reports from the GRI database. “Ensuring that company reports are made accessible and digitised in a machine-readable format is essential not only for big data analysis projects, but for all stakeholders wishing to assess and compare the human rights performance of reporting companies,” the discussion paper said. The paper went on to say that the soon-to-be-set-up European Single Access Point (ESAP) may remedy the situation.
9. ISSB Confirms Scope 3 Emissions Disclosure Requirements in XBRL
There’s good news for those keenly watching the work of the International Sustainability Standards Board (ISSB). Among the key decisions taken at the Board’s meeting in October is that the ISSB’s disclosure requirements on greenhouse gas emissions will include ‘Scope 3’ emissions. Scope 3 emissions are those emissions that a company does not produce directly but for which it is indirectly responsible because they occur along its value chain. While this requirement is bound to increase the complexity of sustainability reporting and mean a compliance burden for companies, it will also add significant value in terms of the data available to investors. More so because the ISSB is also working on a digital taxonomy for sustainability disclosures.
10. XBRL International adds Two Draft Link Roles to its Link Role Registry
XBRL International has updated its XBRL Link Role Registry and added two draft link roles – ‘property’ and ‘propertyWithLang’ – which are meant to provide a standard way to associate key-value metadata with concepts in an XBRL taxonomy. For instance, these link roles could be used to capture the data from which a concept becomes effective or is deprecated. Since different taxonomies take different approaches to this type of metadata, these link roles will provide a standard mechanism and bring in a consistent way of representation. Link roles can best be described as things that define the meaning of a relationship. XBRL International says its Best Practices Board is developing further guidance on using link roles in XBRL reporting.