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Companies urged to review annual reports process for future UKSEF filings

Formatting challenges with the xHTML format should encourage companies to review processes for future UKSEF filings, say industry experts

Companies urged to review annual reports process for future UKSEF filings

Companies have been encouraged to review their annual reports process after experiencing multiple formatting challenges in the recent UK Single Electronic Format (UKSEF) filing.

“We saw a number of filings with technical warnings on issues and errors along with tagging queries and formatting,” says Paul Braden, associate director at KPMG Ireland.

Andrew Stewart, CEO at 1StopXBRL, explains the “real problems you can see in the formatting” are down to companies trying to convert their PDF formatted annual reports into the required xHTML format for the UKSEF filings.

However, xHTML does not have the same formatting capabilities as a Microsoft Word or PDF document making it difficult to convert the file into the correct format, says Braden.

In some cases, these errors can be as little as how the signatures are added into the file, says Stewart.

“It looks okay in the PDF but when we convert it, depending on how the signature has been put in, we’ll get a box around it, so we have to go back to the design team to create the signature with a transparent background in order for it to work.”

The UKSEF filing requirement for UK listed companies is heavily based on the European Single Electric Format (ESEF) by the European Securities and Markets Authority (ESMA) with few country-specific modifications required by the Financial Conduct Authority (FCA). The filings must be submitted to the regulator in xHTML format with XBRL tagging.

Braden noted companies on average had three versions of their reports even going as far as ten in some cases.

“You always have a dry run, the first version and in theory, the penultimate version and then the final version. […] I am not sure how much time was spent reviewing the versions in between.”

In one case, “we were being told it was the final version, you opened it up and a primary statement wasn’t visible on the screen,” says Braden. “No one could have possibly checked that.”

Third party delays

Companies tend to “rely on the expertise” of third parties for their filings which can lead to further delays if the reports are not reviewed in-house, according to Braden.

As such, companies should invest time over the next few years into “understanding the requirements and taxonomy to make sure the most appropriate tags are applied and that you’re meeting the requirements”.

For future filings, companies should reimagine how they approach their XBRL reports and building process, says Braden.

“We don’t tend to see the front end of their annual financial report which is the biggest section and generally the one with the most images – that’s where the formatting issues are likely to arise.”

Instead of making sure the financials are correct before adding in the front and “nicer looking” sections, companies should “spend more time at the start building that into the xHTML and then adding the financials at a later point in order to avoid last minute formatting issues,” says Braden.

Alternatively, companies can make their annual reports process simpler is by starting with the xHTML format and working backwards, says Stewart. “You can create PDF from the xHTML fairly easily.”

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