iXBRL 10 years on: What challenges do reporting companies still face?

Inline eXtensible Business Reporting Language or iXBRL is nothing new for companies in the UK. Since its initial introduction by the HMRC in 2011, digital reporting formats have been applied and mandated for many financial and regulatory reporting regimes including CRD IV, IFR and ESEF. By digitising regulatory reporting, iXBRL has brought multiple benefits to both regulators and organisations, like enhancing the accuracy of reported data and compliance, increasing transparency and consistency, lowering the risks of malpractice and fraud, and improving company analysis and decision-making. But despite the long list of benefits, for many companies, iXBRL has also presented a series of challenges. The need to tag/convert relevant data entries into iXBRL format added yet another level of complexity to the already overwhelmed financial function. Learning new technical skills, deploying new solutions, understanding new regulatory requirements and hiring new personnel or third-party suppliers were just a few of the issues organisations had to tackle in the early days of the mandate’s implementation. Over a decade later, many of these challenges are no longer relevant and iXBRL has become a standard practice. But even after so many years of reporting, we still see a number of challenges that persist and keep bothering financial teams across various organisations. What challenges do companies still face in iXBRL reporting? Below, we’ve outlined some of the most common iXBRL-related challenges that many companies are still facing: Understanding the long-term effect of iXBRL reporting The majority of companies are still failing to understand the real long-term impact of iXBRL reporting. Documents submitted in iXBRL format become a permanent record of a company’s financial state and will remain available digitally for an indefinite period of time. So, companies should ensure the highest possible reporting accuracy and quality. Keeping up with changing taxonomies and reporting requirements Regulation keeps changing. Over the past few years, companies have experienced multiple regulatory changes and taxonomy updates. Just recently (on 21 October 2022), for example, the UK FRC published a draft version of an updated suite of FRC taxonomies that will introduce changes to all existing taxonomies in 2023 (incl. UK IFRS, FRS 101, FRS 102, UK Single Electronic Format (UKSEF), Irish Extensions, and Charities). Staying on top of all regulatory changes is thus remaining to be a major challenge for most financial and accounting teams. Maintaining reporting quality and consistency This directly ties to the first challenge above. We keep seeing companies struggling to maintain the quality and consistency of their tagging and reporting. Changes in personnel make this even harder. Lack of sufficient expertise and adequate internal controls and processes continue to be among the leading causes of reporting errors and failed submissions. “The mission to drive quality would be a multi-faceted endeavour, working with other government departments to prevent misuse of company data. We want to do more cross checking of data with other relevant bodies to drive up quality, and to become a key player in providing quality iXBRL financial data.” - Michelle Wall, Director of Finance at Companies House UK How can companies overcome their iXBRL reporting challenges with nearshore outsourcing? By outsourcing their iXBRL reporting to a trusted nearshore provider like ARKK, companies can: ensure the quality and consistency of their tagging, minimise the risks of inaccurate reporting and regulatory fines, and save valuable time and resources spent on managing internal processes and keeping up with the constantly changing regulatory requirements. With offices in Belfast, London, and Dublin, ARKK completes 5,400+ returns and applies 1.4m tags per year serving a diverse range of clients, from FTSE 250 companies down to SME. Its Belfast-based dedicated team of accounting and software specialists is focused wholly on iXBRL tagging and delivering on ARKK’s sophisticated and personalised outsourcing approach. ARKK’s service enables businesses to upload Microsoft Excel or Word files via a secure portal. From here, the team of tagging experts download, tag, review, test file and return the files within 15 days – or sooner via the express service. ARKK has supported the iXBRL tagging requirements since their first implementation, and tag for HMRC, Companies House and Irish Revenue iXBRL reporting. The fact that ARKK’s tagging team is based in the same country as most of its clients makes it extremely easy for them to pick up the phone and speak to the person who tagged their accounts. With no language barrier or time difference, this is a valuable but easy-to-deliver benefit. The team themselves benefit from the proximity to ARKK’s other offices, as regular training sessions and face-to-face meetings with the London headquarters encourages a consistent approach. The company also believes being nearshore helps fulfil its key aim to be more efficient and transparent. One thing many ARKK customers have noted very enthusiastically is that they can be assured their data is not going offshore to a jurisdiction. There is no uncertainty who is handling their data and the laws which protect it. Having reporting experts close at hand means that software can be refined regularly to take in crucial regulatory changes. ARKK’s development team updates and maintains its proprietary tagging software in London. The company is also recognised by HMRC as an approved vendor, and is among the first providers to support early adopters with the transfer to the new FRS requirements. For ARKK’s clients, iXBRL reporting is one less thing to worry about around the busy year-end period. While you concentrate on your day-to-day financial operations, the local tagging team provides consistent reporting, expert advice and ongoing cost savings for simple submissions to HMRC and Revenue.