FCA to take complexity into account with block tagging requirements
The UK’s Financial Conduct Authority (FCA) has issued updated guidance for filers preparing to navigate new block tagging requirements while reporting under the European Single Electronic Format (ESEF) mandate.
Block tagging involves using XBRL tags to tag blocks of content, without individually tagging numerical data within these blocks. Under ESEF reporting rules, filers will be expected to apply all relevant block tags, with a high degree of granularity. Given the greater potential for subjectivity in text block tagging, and possibility for overlapping and non-contiguous block tags, the requirement is expected to introduce some complexity to filing.
The FCA has notified filers that while it intends to adopt the 2022 version of the ESEF manual from January 2023, including block tagging requirements, it is aware of the complexities associated with block tags. While market participants are expected to take reasonable care, the FCA recognises that the approach could be complex and that issuers will need to use their own judgement in tagging – and reassures filers that it will take this into account while assessing the quality of submissions.
At XBRL International we welcome this statement, and similar statements made in recent days by ESMA representatives. There is work to be done by both software vendors and the IFRS IASB taxonomy team to help resolve some of these questions and it won’t all get done in time for companies to file their 2022 annual accounts. Ultimately, Europe would likely be well served by ensuring that at least material notes to the accounts are subject to “detail tagging”, which will greatly enhance their utility for investors and analysts that need a range of information contained within the notes. A robust debate will no doubt commence in 2023!
Read more here.