The need for accurate and timely data has encouraged countries to adopt digital financial reporting standards such as XBRL and iXBRL. European Union is the latest to shift its regulatory reporting requirements, wherein issuers need to start reporting in iXBRL format instead of PDF files. With our experience in close to 32 countries, we have observed that every time there is a new XBRL/iXBRL mandate in a country, issuers prefer to outsource the XBRL/iXBRL creation to XBRL service providers since they are not too sure how to go about with a new reporting standard and do not want to take a chance of getting it wrong.
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However, there are still many myths surrounding XBRL Tagging and why most companies tend to outsource the process. The main concerns surrounding companies outsourcing their compliance tagging are the following: –
- Understanding XBRL and tagging documents are too complex
- It is more convenient to outsource my XBRL Tagging
- XBRL Tagging is going to increase my compliance burden year on year
In reality, all the above reasons are myths surrounding XBRL tagging. Let’s take a look at the above myths in detail so that you can take a more informed decision for the upcoming ESEF mandate:
Misconception #1:Understanding XBRL and tagging documents are too complex
Reality: Conventional approaches to filing with the regulator involves an understanding of the taxonomy, XBRL specifications, and validation rules. A typical process involved either keying in numbers in case of excel template tools, which is a manual process and prone to mistakes since numbers could be keyed in wrong, not to forget excel tools do not generate a beautiful stylized annual report or the need to look for the appropriate tag in a taxonomy (which has thousands of elements) and map such element to the disclosure with the appropriate dates, unit, and scales. Either way, the act of tagging has been a highly manual process with the need to have resources with XBRL expertise.
How would you like it if this whole exercise is replaced by an automated tagging approach? As talked about in our earlier blog, Leverage our advanced AI/ML capabilities for effortless iXBRL Tagging, our platform introduces a new and intuitive way to tag financial statements. With IRIS CARBON®, almost 95% of the document will be automatically tagged for you with 100% accuracy. Instead of manually tagging each element to the document, relevant numbers on different statements will be automatically tagged by our intuitive system, and if unsure, will pose suggestions. If your team can understand financials and numbers, they very well will be able to navigate through our automatic tagging activity, all your teams will need to do is review the tagging. You will be able to save substantial time and man-hours with our advanced AI-enabled tagging. Nothing is too complex with IRIS CARBON®!
Misconception #2:It is more convenient to outsource my XBRL Tagging
Reality: Though it may be easier or more convenient to get your tagging done through an outsourced vendor, data security continues to remain a top challenge for companies. Typically companies send their financial reports to their outsourced XBRL/HTML providers through emails. Emails are the most insecure way to send across financial reports, especially if they contain highly sensitive unpublished data. Emails are prone to virus attacks and other cyber security risks. Apart from this, humans could also be a point of data misuse. The documents that you send to a financial printer are handled by multiple team members from the Financial Printer team. Data leakage by any member of the team can cause the financial printer unimaginable impacts and consequences.
Out of the numerous items that an issuer’s compliance team is responsible for, adopting a SaaS solution for compliance reporting helps companies save a lot of time with just a simple and streamlined process and provides a new and improved way of XBRL Tagging.
With advanced AI/ML capabilities, our platform sets a new standard in tagging financial information and can totally be done in-house. Instead of manually creating taxonomies or outsourcing the whole activity.
Misconception #3: XBRL Tagging is only going to increase my compliance burden year on year
Reality: Regulators around the world have introduced the XBRL standard to efficiently access, and analyze data helping them identify any early signs of mishaps or malpractice. Companies usually tend to believe that XBRL reporting is going to result in the same efforts year on year. The initial learning curve and efforts needed may be higher in the first year due to understanding the requirements, in the beginning, it will be smooth sailing thereafter. For companies who outsource the tagging, the efforts would remain the same every year, with IRIS CARBON® things are different. With an aim to reduce the time taken for successive period filings, intuitive features such as Previous Year Mapping and Rollforward assist with reducing the tagging time for successive period filings. For users who use the platform only for iXBRL preparation, with the Previous Year Mapping functionality, all they need to do is load their current period Annual Financial Report (AFR) and the prior period iXBRL. For the Primary Financial Statements, tagging from the prior-year period automatically apply with the help of AI/ML algorithms we have introduced. If the issuer is using the platform for preparing their AFR, the Rollforward feature retains all the tagging 100% for the successive period reports.
Our solution’s advanced algorithms and intuitive tagging approach substantially save substantial time and money and simplify the XBRL reporting process – for first-time and experienced filers alike. You may or may not know the XBRL standard or the nuances of the tagging process, the IRIS CARBON® platform gets more than half the job done!
We hope this article has given you a slice of the reality of what an automated tagging activity with IRIS CARBON® would be like. If you have any queries around XBRL or XBRL Data Tagging, feel free to contact us at firstname.lastname@example.org