The Financial Reporting Council (FRC) and other UK regulators have launched a wide-ranging consultation on the future of digital financial reporting in the country, signaling potential significant changes to how companies submit financial information.
The recently released discussion paper addresses key developments in the regulatory landscape following the UK’s exit from the European Union and the passage of the Economic Crime and Corporate Transparency Act 2023. It seeks input on crucial issues including alternatives to the European Single Electronic Format (ESEF) taxonomy, expansion of digital reporting requirements, and the implementation of “full tagging” mandates.
One key area of discussion is whether the UK should move away from the EU’s ESEF taxonomy towards a UK-specific alternative. The paper presents two main options: adapting the IFRS Foundation’s taxonomy or using the FRC’s existing UK-IFRS taxonomy.
The IFRS option would maintain alignment with international standards, potentially easing comparability for global investors and multinational companies. However, the UK-IFRS taxonomy is tailored to the UK’s specific reporting environment, which could benefit UK-incorporated preparers.
The regulators are also exploring the extension of digital reporting requirements beyond current mandates. Potential areas for expansion include sustainability reporting, interim financial information, and prospectus data.
The FCA is particularly interested in prioritizing areas that support market transparency and efficient pricing. The paper asks stakeholders to weigh in on which new types of information should be prioritized for tagging, both within and beyond the annual report.
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