The lab’s ‘deep dive’ report says that while XBRL is used for corporate reporting purposes in more than 60 countries around the world, there is currently no requirement to use it for consolidated financial statements in the UK.

However, the report suggests this is likely to change with the introduction of a new European single electronic format (ESEF) for digital corporate reporting due in 2020.

The report states: ‘Overall, we conclude that XBRL is an important gateway technology for digital corporate reporting. It offers many potential benefits for preparers and consumers of corporate reporting.

‘However, these benefits are not guaranteed. The potential for XBRL to truly deliver for preparers and consumers will need a sustained focus from all those concerned and will need leadership and innovation from regulators, companies, investors and technology providers.’

The lab’s review identified gaps between the characteristics that users and preparers desired from digital reporting and the expected implementation of XBRL for listed company reporting.

To address these, among other recommendations, the lab wants to see the formation of a single committee in the UK with representatives from each of the regulators and government (such as FRC, HMRC, Office for National Statistics, Companies House, Financial Conduct Authority and the Department for Business, Enterprise and Industrial Strategy).

The lab report states: ‘The committee would have the mandate to explore the potential benefits of driving digital reporting in the UK, facilitate cross-regulator working to ensure that the adoption of ESEF (or a UK alternative) is efficient and effective, and engage with the wider reporting community.’

The committee would be charged with exploring the potential benefits of data reuse in the UK, and where needed, align reporting requirements; ensuring that regulators work together to adopt ESEF, or UK alternative, to provide better quality corporate reporting data; and engaging with companies and investors about this work.

The FRC says it fully supports the recommendation to form a committee to help promote digital reporting in the UK and will look into how this can be taken forward.

Other recommendations include more technology tools and packages for non-technical users who create, distribute and consume XBRL data, while it also says companies should develop a strategy at board and audit committee level to discuss how they implement XBRL. It also says regulators need to work together both nationally and internationally if XBRL reporting is to fully optimise the reporting process for preparers while still working for users of corporate reporting.

Phil Fitz-Gerald, director of the Lab, said: ‘We are at a turning point for the use of technology in corporate reporting. The paper-based way of reporting is likely to change with the European requirement to prepare digital financial information by 2020. 

‘The changing demands of users, supported by upcoming regulatory changes mean that boards can no longer ignore digitisation of listed company reporting. This report urges all those involved in corporate reporting to help shape the future.’

The lab’s report on XBRL is the first of a series of technology deep dives. Future reports will cover blockchain, artificial intelligence and augmented/ virtual reality.

XBRL: Deep-dive Digital future of corporate reporting is here.

Report by Pat Sweet