ESEF iXBRL reporting

It is a common observation that calculation errors account for the maximum number of errors in XBRL filings. This has been mainly observed in XBRL filings in the US, where companies end up assigning negative values to concepts that are expected to have a positive value in XBRL and vice versa, and this leads to calculation inaccuracies in the filings. Such errors take place because of a phenomenon called ‘reversing signages’ — a pitfall best avoided in your ESEF iXBRL reporting.

The way to avoid running into a reversing signages issue is to consider the balance type of any monetary element being reported in your ESEF iXBRL report. The balance type describes whether a monetary concept has a ‘debit’ or a ‘credit’ value.

The Balance type is a major attribute of any monetary element that helps to avoid calculation errors. It describes whether the used monetary concept is a ‘debit’ or a ‘credit’, and not only goes by its representation in the annual report.

Balance types play a vital role when a monetary element is used as a part of an XBRL calculation. Let’s consider three monetary concepts for instance — revenues, cost of goods sold, and gross profit. These concepts are part of a simple formula to find out profit: Revenue – Cost of Goods Sold = Profit.

ESEF iXBRL reporting

In an XBRL taxonomy, the balance type of profit and revenue is defined as ‘credit’ and alternatively, for cost of goods sold, the balance type is ‘debit’. When you establish a calculation relationship between these three monetary concepts, you derive the value of gross profit by deducting the value for cost of goods sold from revenues.

However, when a company shows the value of cost of goods sold as negative on the human-readable part of its ESEF iXBRL report, and simultaneously tags this value as a negative number in the machine-readable layer, the calculation relationship that already places a negative value on the element gets combined with the tagged negative value to create a positive calculation relationship. Cost of goods sold is then shown as a positive fact, which gets added to revenues rather than getting deducted.

Thus, it is essential to tag cost of goods sold as a positive value in XBRL, even if it is shown as a negative value on the human-readable face of the ESEF annual report. The appropriate balance type of the concept and its placement in calculation will ensure that viewers perceive it as a debit item that will be deducted from revenues.

ESEF iXBRL reporting

When the human-readable layer of an ESEF iXBRL report shows an item as negative (or in parentheses) for ease of representation to users, reporting teams make the mistake of tagging the item as a negative value. It is therefore important to watch for the balance type of an item in XBRL before deciding on the right sign for tagging. This will help you to avoid one of the most common errors companies make while preparing your ESEF iXBRL report.

While selecting tags from the ESEF taxonomy, it is, therefore, vital to have a good understanding of the balance types of elements and how they participate in calculation relationships. Having an XBRL validator built in with your report creation tool will help you to detect errors stemming from wrongly applied signs in your ESEF iXBRL report.

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ESEF iXBRL reporting, XBRL

ESEF iXBRL reporting, XBRL

ESEF iXBRL reporting, XBRL