Take ownership of your digital message
Co-authored by Alexandre Prat-Fourcade, Corporatings and Mary Tinnelly, ARKK
Corporate Reporting in the Digital Age
Financial reporting entered the digital age three years ago, with the first step being the requirement to tag financial statements and notes. The next frontier could involve the tagging of sustainability reports, with even more detailed tagging becoming commonplace in the near future. In the European Union, the European Securities and Markets Authority (ESMA) has already consulted on the adoption of digital reports and the value of detailed tagging.
A Growing Demand from Investors and Analysts
Consistent and comparable information is essential for investment analysis. This principle has driven the push towards the digitisation of financial data for over two decades. While this journey has faced challenges, the value of digital data has proven indispensable. Digitised reports are already being used effectively for benchmarking and analysis in markets like the United States, where extensive data is readily available. Unfortunately, many European companies still lack the same level of data availability.
Leading the Way in Data Quality
Companies like Corporatings are at the forefront of providing comprehensive datasets that allow end-users to perform detailed benchmarking and valuation using XBRL data. As leaders in analysing digitised data, they have identified numerous challenges related to data quality.
In the UK, regulators have also identified a low compliance rate and significant tagging errors in XBRL financial statements. In response, the Financial Reporting Council (FRC) has introduced Provision 29, which imposes new internal control requirements for listed companies. These companies are now required to explicitly declare the effectiveness of their risk management and internal control systems, which must include compliance with the UKSEF reporting framework.
Moving forward, directors will need to certify that their internal controls cover the process of producing accounts in the UKSEF format. Any significant errors in XBRL tagging such as incorrect tags or structural issues in digital reports could indicate weaknesses in internal controls. As a result, financial management teams and those responsible for annual reports will need to refine their processes for reviewing and validating XBRL tagging to ensure compliance with high standards.
A Ready-to-Use Solution for Compliance
Achieving compliance with ESEF can be complex, especially when it comes to implementing internal controls to ensure data quality. The format is highly technical, with hundreds of tags and attributes to manually review. In addition to technical checks, issuers must verify that each tag’s accounting meaning aligns with its intended interpretation in the PDF version of the report.
Recognising this need, the innovative teams at ARKK went beyond regulatory compliance to create the most advanced digitalisation services, backed by high-quality data. ARKK work closely with their clients throughout the reporting process, to ensure the reports are marked up consistently with the disclosures being reported in the human-readable version. To enhance the process for their clients, they found in Corporatings the best partners, as Corporatings already had developed automatic data quality checks to ensure the highest standard of data.
The set of validation rules guarantee the accuracy of attributes such as signs, decimals, anchoring where necessary, and mapping quality. With one-click automatic benchmarking, you can quickly verify whether your tags align with industry standards. The intuitive interface requires no specialized training, making it accessible for all users. Finally, the Excel export functionality helps justify the internal controls needed under Provision 29.
An Innovative Partnership for Seamless Compliance
Together, Corporatings and ARKK have proactively established an innovative partnership, enabling you to be compliant with Provision 29 right away while ensuring your data quality remains top-notch. We invite you to discover how we can help you implement the necessary internal controls and unlock the full potential of information digitalisation.
Want to hear more? Join our webinar on this topic on 16th April at 10am BST. Click below to register.
