ESEF iXBRL Mandate: How To Prepare A Quality Instance Document?

ESEF iXBRL Mandate

UK-based companies that must comply with the ESEF mandate must submit their annual financial report in a digital format to the Financial Conduct Authority. To be specific, the ESEF iXBRL format has two components — an instance document and a company taxonomy. What must you know about the two components?

Instance document

Your instance document would be your annual report in a digital or iXBRL format. What does the digital format facilitate?

Answer: Your annual report can be read by a human as well as a machine (computer). That’s because your iXBRL annual report will have machine-readable tags embedded against a human-readable layer. Simply put, your iXBRL annual report will look just like a PDF document, but your data will have machine-readable tags embedded so that the data can be read or recognized by a machine.

Therefore, when you prepare an instance document in compliance with the ESEF iXBRL mandate, you not only ensure that your data gets shared with your stakeholders, but they are also able to analyze it better by running peer or sector comparisons at a click.

Company taxonomy

A company taxonomy is a combination of the elements you adopt out of the ESEF taxonomy to present your data or disclosures. In other words, your disclosures and customized concepts and the inter-relationships between them make up the company taxonomy. The company taxonomy comprises four linkbases — Presentation linkbase, Calculation linkbase, Definition linkbase, and Label linkbase — that define the structure of an iXBRL document.

In this write-up, we focus more upon the instance document and one of the aspects contributing to its quality — tagging.

For a quality instance document

Your instance document creation involves linking each line item or disclosure in your annual report to a relevant ESEF taxonomy concept. If you fail to find appropriate taxonomy concepts to link some of your disclosures with, you will have to create custom tags or extensions. These custom tags will also have to be ‘anchored’ to taxonomy concepts with the nearest accounting meanings.

Adding quality to your tags

Tags help impart machine-readability to your instance document. It will help you to have a good grasp of the ESEF taxonomy as well as your own report so that you pick appropriate tags.

To understand how machine-readable tags look, here’s an example.

‘ifrs-full_Revenue’ is the IFRS tag for revenue and ‘ifrs-full_CurrentAssets’ is the tag for current assets. Every tag has three attributes: data type, balance type, and period type.

Data type: It helps denote whether the reported fact or element is monetary, depicts shares, or a percentage. For instance, the data type for the tag ‘ifrs-full_Revenue’ would be ‘monetaryItemtype’

Balance type: The classification of a monetary concept as ‘debit’ or ‘credit’ is denoted by the balance type. In the above example, the balance type for revenue is ‘credit’.

Period type: The attribute of an element that demonstrates whether it is measured as on a particular date or over a period is represented by Period type. Income statement concepts are an example of a ‘duration’ period type, since items reported on an income statement are measured annually. Similarly, since a balance sheet is reported on a particular date, balance sheet concepts will have the ‘instant’ period type.

Starting points to assure quality in your ESEF iXBRL instance document creation process

  • For compliance with Phase 1 of the ESEF iXBRL mandate, all numbers in your primary financial statements need to be tagged. In Phase 2 of the mandate, you must tag your text disclosures, too. You are, however, free to take a comprehensive approach to ESEF iXBRL mandate compliance by tagging both your numbers and text right from Phase 1.
  • We recommended that you predominantly use ESEF taxonomy concepts during the tagging process and avoid creating custom tags unless absolutely necessary.
  • The tags you select for your primary financial statements must have data, balance, and period type relevant to the line items in your report.

To go beyond a ‘bare minimum’ compliance with the ESEF iXBRL mandate, focus on tagging all concepts in your financial statement with ESEF taxonomy elements. And ensure that the tags you select have the right data, balance, and period types. Furthermore, do not hesitate to tag even the text disclosures in your statements. The most important part: acquaint yourself with the ESEF taxonomy.

Need help preparing a quality instance document that is in perfect compliance with the ESEF iXBRL mandate?