Follow the Connections
A new post from XBRL International’s Entity Specific Disclosure Task Force (ESDTF) delves into the complex but crucial process of incorporating common practice reporting elements into financial reporting taxonomies like IFRS and US GAAP. The same technique can be used by analysts and data providers ahead of standards setters actions in this area. Filers often use extension elements to meet reporting requirements not explicitly covered in accounting standards, which can hinder data comparability and require relatively sophisticated analytic approaches to align different corporate disclosures. The blog described how taxonomy authors have traditionally faced challenges in efficiently grouping these extension elements due to their volume and varied meanings.
A significant advancement comes from the European Securities and Market Authority’s (ESMA) introduction of ‘anchoring’ in reports. Anchoring links extension elements to the wider or narrower elements in the base taxonomy, aiding in clearer interpretation and improved comparison of financial data. This post explains how anchoring can be leveraged to identify and group common practice concepts more effectively, providing clear, step-by-step guidance on this process. This technique can be used by analysts as well as taxonomy authors.
The use of anchoring not only streamlines the identification of common practice elements but also offers insights into the way that companies use extensions, enhancing overall financial reporting quality. We think this article is essential reading for technically minded professionals involved in the preparation of digital corporate reports, audit, and data analysis, providing them (and taxonomy authors) with an advanced methodology to improve data comparability. Check out the full article and accompanying interactive dashboard to delve deeper into this innovative approach here.
