Taxonomies are used when tagging accounts for electronic filing and for other analytical purposes. Electronic tagging helps users of financial information in corporate reports to extract the information they want and analyse it more efficiently.  The consultation seeks comments from “users, preparers and others” on three taxonomies to reflect full EU adopted IFRS and the new financial reporting standards for the UK and Ireland – Financial Reporting Standard (FRS) 101 and Financial Reporting Standard (FRS) 102.  

Our key points in response to the consultation are:

• We commend the FRC for taking on the governance of the UK XBRL taxonomies. A strong governance process with due process is needed, given the increased move towards online filing.
• We suggest that the FRC publish a timeline for when other specialist parts of taxonomy will be prepared and by whom. At the moment these taxonomies do not contain tags for banks, insurance companies and charitable companies preparing financial statements under FRS 102. We also ask the FRC to commit to timely maintenance of the taxonomies as and when UK GAAP, IFRS or company law is updated as early adopters may need to be able to file their financial statements with HMRC and/or Companies House.
• We comment on the tagging of material within the annual report other than the financial statements. The FRC explained the principles as to how it decided for which information it will develop tags for. However, it is not clear from the detailed draft taxonomies that these principles have been applied consistently. We suggest that this may be useful to discuss with users via the FRC’s Financial Reporting Lab – ultimately there is a balance between tagging information at a granular level (making it easy to find) and imposing a rigid structure which may stifle innovation in reporting. 

Further comments and a full response to all questions raised in the invitation to comment are contained within the full comment letter.