Taxonomy building blocks
This post is by Erwin Kaats, XBRL expert at Logius, on behalf of the Taxonomy Architecture Guidance Task Force (TAGTF). This group is made up of taxonomy experts who work to define best practice and produce reliable and high-quality XBRL International guidance to improve the comparability of data by increasing the consistency of taxonomies around the world.
XBRL taxonomies comprise all of the different types of information needed to completely define a machine-readable dictionary about a specific reporting environment. Taxonomies don’t just provide a definition against a word, they also capture the relationships between different concepts, links to authoritative literature, labels (often in multiple languages) and the core characteristics of a specific reporting term.
By thinking of taxonomies as modular ‘building blocks’, it is easier to design and maintain these sometimes complex products. In this blog post, we will look at some of the different reporting scenarios, structures and taxonomy owners and get familiar with some of the terminology used to describe them.
The XBRL glossary defines a base taxonomy as a starting point for an extension taxonomy. The latter are built on one or more base taxonomies, with additions or modifications.
Extension taxonomies take two forms. Firstly, governing bodies may build their own taxonomies upon existing base taxonomies. Secondly, filers may start with base taxonomies and create extra elements to add definitions specific to their situation. In both cases, the key to an efficient reporting chain is to reuse definitions as far as possible.
Figure 1: Definitional taxonomies (bottom) used in reporting taxonomies (top).
A variant on the base taxonomy is the definitional taxonomy. This type of taxonomy forms the data dictionary on which reports are based. It is not accessed directly, but rather is used by a number of reporting taxonomies all employing this same dictionary to define individual reporting requirements. As such, creating a definitional taxonomy requires a thorough understanding of the underlying law and regulatory texts.
In the Netherlands, we further distinguish between taxonomies that only define legal references, and those which provide guidance on how to interpret these laws. This allows maintainers to divide tasks between different experts and organisations. Informally, they are sometimes referred to as ‘de ballenbak’ (the ball pit), as they allow us to ‘pick and choose’ from existing definitions. It is this modular structure that enables the use of the same definitions across domains.
A reporting (or presentation) taxonomy, designed to be referenced directly by a report, adds structure to a definitional taxonomy. These additions may be small, such as the organisation of elements into a parent-child hierarchy. On a larger scale, using the table linkbase and formula specification allows regulators to completely customise the way an end user interacts with the report. Who maintains the taxonomy depends on the complexity of the report. Dividing the taxonomy into building blocks simplifies collaboration with software suppliers and end users.
An individual report is usually identified by its entry point. Sometimes it is convenient to have a single entry point that addresses all the reports, and these are referred to as ‘all’, ‘combined’ or even ‘umbrella’ entry points.
Reporting bodies are not the only ones able to use this modular set of building blocks. As noted above, for filers there is the entity-specific extension taxonomy. This allows organisations to reuse generic definitions, leaving only organisation- or domain-specific definitions to be added when filing reports.
When creating a taxonomy, it is wise to bear in mind that others might be interested in reusing elements, and to make them as easy to understand and use as possible. Not only might other organisations benefit from existing knowledge, but this approach also adds value to the base taxonomy that is being reused. After all, every reusable building block developed adds a helpful starting point for new and extendable future building blocks.
How are taxonomies arranged in your ecosystem? As part of our goal to make taxonomies more consistent we would love to hear if you take a different approach, and are planning a special follow-up session to this post. To provide feedback or join our session, please contact us on tagtf@xbrl.org.
