CP23/2: Streamlining our rules on structured digital reporting of financial statements

In line with the UK government’s intention to replace currently retained EU legislation and UK regulators‘ intention to streamline UK legislation to enhance transparency, competitiveness, and regulatory compliance, the Financial Conduct Authority (FCA) has now launched a new consultation (CP23/2) in this context.
Specifically, the FCA proposes to implement its own regulations as regards the electronic publication and disclosure of financial reports of public issuers in an XHTML format with XBRL taggings as stipulated in the currently Retained European Single Electronic Format Regulation (UK ESEF Regulation). In detail, the FCA proposes to make new Rules under its Disclosure Guidance and Transparency Rules sourcebook to adopt the key provisions contained in the retained regulation which would – among others –
– require consolidated annual financial statements of public issuers be prepared in the XHTML format;
– require consolidated annual financial statements which are prepared in accordance with International Financial Reporting Standards (IFRS) to be „prepared and published in the tagged, structured digital format“ (e.g. XBRL) ; and
– permit companies not preparing consolidated statements (solo firms) to refrain from the preparation in the tagged, structured digital format even when preparing their financial statements in accordance with IFRS.
Additionally, the FCA proposes to require firms to use „a generally accepted taxonomy to tag IFRS consolidated annual financial statements“. Generally accepted taxonomies would thereby refer to taxonomies typically used for company disclosures in the UK and that are in line with the taxonomy standards set out by the IFRS Foundation.
Finally, the FCA proposes to publish a new Technical note (please see Appendix 3 of the consultation paper) to define a „generally accepted taxonomy“ for purposes of tagging IFRS consolidated annual financial statements“. In this context, it shall be noted that there would be no change for issuers relying upon the EU ESEF taxonomy as it would still qualify as a „generally accepted taxonomy“.
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The above noted proposals would bring about some major benefits to UK reporting firms by
(1) moving all reporting obligations of issuers into one place, the Disclosure Guidance and Transparency Rules sourcebook of the FCA, and thus no longer requiring any cross-referencing between the Retained ESEF Regulation and the sourcebook and
(2) still permitting UK reporting firms to rely upon the EU ESEF taxonomy.
The consultation closes on February 24, 2023.