Accuracy and timeliness in data acquisition are increasingly treated as essential factors in governance and taxation. In the UK, especially, the need for digital transformation has extended to reporting and has translated to the mandate of using standards such as XBRL and iXBRL. This regulatory reporting requirement enforces issuers to start reporting in iXBRL format instead of PDF files. As is the case with any new technological compliance requirement, many companies have turned to outsource the XBRL/iXBRL creation to reliable service providers. With the risks of error and trouble in navigating these waters, most companies prefer to hand this job over to experienced professionals, so they are not in the wrong side of the law.
However, there are always those naysayers who are still on the fence about the ease of this process. So, in this blog, we would like to walk you through three of the most common myths surrounding outsourcing XBRL.
Belief 1: No prior knowledge of XBRL is required if this task is outsourced.
It’s not as simple as you think! Delegating the process of XBRL tagging requires knowledge about the configuration of the data so that you can run the required checks and ensure that the information is not misrepresented.
In order to review your filing, you need to:
- Be aware of what goes into the taxonomy so you can check if the accuracy of the terminology is selected. After all, no one knows your requirements as well as you do!
- Ensure that the right extension is selected, it is accurate, and primarily, it is required to reflect your reporting intentions.
- Articulate what values are being reported through understanding how XBRL format transforms values.
Belief 2: Overloaded teams will get some relief
You’ve outsourced your XBRL tagging, but what about the legal liability? Unfortunately, you and your company are accountable for what you submit. Accuracy of the report, representation of the numbers and the level of compliance are all your responsibilities and not the vendors.
Therefore, you will still need manpower to comprehend and review the quality of the work. The task of tagging can be completed by experienced professionals for you, but once that is done, your team will still have the essential responsibility to justify tagging decisions and act on changes, if required.
Belief 3: XBRL tagging is a herculean task
Yes, this may be true. But not entirely. While it might appear so, the right software and knowledge can help complete this process efficiently. There are multiple disclosures solutions to aid teams in their efforts to map and tag documents on their own.
All you need is the right solutions and an experienced team of experts to perform your own XBRL mapping, modelling, tagging, and filing. The right combination gives you complete control over the entire process and stick to deadlines too.
Now that you know that outsourcing your XBRL process is not really a breeze, you may now wonder how you can streamline your existing reporting process to handle the process of XBRL tagging? Well you have to keep in mind that you will need:
- A modern financial reporting software capable of easing the process for you.
- A dedicated team of experienced professionals who are experts in XBRL tagging and associated processes.
- A clear review and monitoring process that ensures accuracy while dealing with any possibility of errors.
In summary, outsourcing is definitely not out of the question. You can resort to this option to ensure that you are compliant with the government’s rules and regulations. However, it is not an activity that you can delegate in entirety. It will need your intervention and support for seamless and efficient engagement with a third party.
If you are ready to partner with a robust and agile firm that is seasoned in XBRL/iXBRL tagging, we’re geared up too! DataTracks has had over 15 years of experience in helping more than 18,000 firms in the global market with their compliance and reporting requirements. To start a discussion and find out more about what we do, get in touch at firstname.lastname@example.org