Transparency in financial reporting is almost always equated with making available more granular data. And while the drive for transparency in financial reporting may seem like an unnecessary overhead at times, the move always benefits companies (and a country’s economy) in the long run. Close to four months from now, the ESMA iXBRL mandate (also known as the European Single Electronic Format (ESEF) mandate) will commence. As briefed in our introductory blog, ‘What is the ESMA Mandate all about?’ the Inline XBRL (iXBRL) reporting standard will be applicable to all public issuers in the EU beginning 1st January 2020. iXBRL Tagging

Our experience from other countries (where a new XBRL or iXBRL mandate is introduced) has taught us that issuers initially struggle to understand the nuances of a taxonomy and the mandate, the tagging process, and concepts around XBRL/iXBRL in general. iXBRL Tagging

In an aim to simplify the tagging process, IRIS CARBON®, our ESMA-ESEF iXBRL SaaS Product for issuers, has leveraged the use of Machine Learning for XBRL/iXBRL tagging. To understand this, we’ll have to take you back to what a typical tagging process looks like.

Manual Tagging Process

XBRL or iXBRL tagging of annual and quarterly reports in most countries is a pretty manual process. The regulator’s taxonomy (in this case, the ESMA taxonomy) is searched for appropriate tags; the most preferred element is picked and applied to the concept in one’s own annual report that requires tagging. The company taxonomy is then created (as required by the ESEF mandate) based on the mapped data. Individuals well-versed or familiar with the layout of the tree structure of the ESMA taxonomy might man-oeuvre their way faster, but it is still a tedious process that can take them several days to complete.

Automated iXBRL tagging with IRIS CARBON®’s machine learning algorithms

Drawing from IRIS’ deep expertise in XBRL/iXBRL across 22 countries, IRIS CARBON has leveraged machine learning algorithms to automate a large part of the tagging process of Primary Financial Statements of annual reports. This will help issuers immediately meet the first phase of their ESEF compliance reporting requirements.

Our algorithms are trained across multiple languages, including English, French and Dutch; and are being trained across more EU languages as well. Using these algorithms, IRIS CARBON automatically tags all elements of the primary Financial Statements where it finds a 100% match in the taxonomy. The algorithm also throws up suggestions when not sure of the tag to select. If our algorithms do not find a suitable taxonomy element match or suggestions for any item in the financial statement, they leave such items in the report untagged. For these untagged elements, users need to follow the manual tag selection process as described in the previous section. Rest assured, we make no compromises on quality of tagging – whatever gets tagged is 100% accurate.

iXBRL Tagging

Based on these advanced capabilities in the IRIS CARBON solution, issuers in EU can more confidently choose to do their iXBRL tagging on their own, and use our expert services for iXBRL conversion services only where required.

Benefit 1 - Save Substantial Time and Cost:

Our advanced algorithms and intuitive tagging approaches save you significant time (with upto 95% of the Primary Financial Statements getting auto tagged even for first time filers). Not only do you save many hours, if not days, of your valuable time, you also save money, and simplify your iXBRL reporting process.

Benefit 2 – Greater Accuracy of Data:

iXBRL implementations across the world have ensured standardization of Financial Reports. However, this still does not address another fundamental challenge of tagging financial information: the data might be structured but is the tagging accurate?

Our platform, for the ESMA iXBRL Mandate, has a tagging accuracy of 100%. Elements that are not tagged are posed as a suggestion.

Given the complexity of today’s regulatory environment, intelligent technology implemented correctly can ensure consistency, lower the probability of human error, and significantly reduce an organisation’s time and effort spent in the regulatory compliance process. Get on board now for the ESMA iXBRL mandate, and change the way you tag for good!

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