What’s Next for Digital Reporting? FRC Calls for Feedback!

A coalition of UK regulators and agencies has launched a discussion paper that is focused on enhancing the quality of digital reporting to boost corporate transparency in the post-Brexit era. This initiative includes input from the Financial Reporting Council (FRC), HMRC, Companies House, the Financial Conduct Authority, and the Charity Commission.

Key Issues in Digital Reporting Post-Brexit

The discussion paper addresses several critical areas, including the scope of digital reporting requirements, the assurance of digital reports, the development of XBRL taxonomies, and the guidance needed by users. One of the central challenges is that, following Brexit, UK regulators no longer have a say in the development of the European Single Electronic Format (ESEF) taxonomy, which UK companies are still required to follow.

The paper also discusses the implications of the recently enacted Economic Crime and Corporate Transparency Act 2023 (ECCTA). This legislation aims to combat abuse of the Companies House register by granting Companies House the authority to mandate digital filing of company accounts. This new power will allow Companies House to check, reject, as well as improve the quality of data on the register, with future requirements for company accounts to be 'fully tagged’.

Future Directions in Digital Reporting

The discussion paper has several key topics being covered, including the potential alternatives to the ESEF taxonomy for UK-regulated markets, proposed changes to structured digital reporting to support regulatory disclosure, and considerations for mandatory assurance of digital tagging. Additionally, it explores the impact of 'full tagging' requirements on companies and charities, and also includes strategies to help stakeholders adapt to new digital reporting standards.

The FRC has emphasised that this paper aims to be accessible and understandable, despite the complex subject matter. Although no specific decisions will be made based on this discussion paper, the responses received will shape the group's thinking on the technical and practical implications of future policy decisions. This may lead to future consultations by individual regulators or agencies on the implementation of the evolution of digital reporting requirements.

Call for Stakeholder Feedback

The discussion paper is seeking feedback from a broad range of stakeholders, including financial report preparers, investors, software vendors, accountants, and regulators. The goal is to help shape the future of digital reporting in the UK, ensuring it meets the needs of all users while promoting transparency, comparability, and efficiency in corporate reporting.

An FRC representative stressed the importance of hearing from stakeholders about how digital reporting can continue to evolve in the UK and enhance the benefits it offers. With market intelligence and data becoming increasingly vital for decision-making and monitoring outcomes, the FRC is keen to develop a strategy for UK taxonomies that will serve businesses well into the future.