Workiva helps companies kickstart their ESEF tagging with XBRL Machine Learning
By Andromeda Wood, Senior Director of Data Modeling, Workiva
As we head into annual reporting season, companies across Europe are looking more closely at what they need to do to comply with the European Single Electronic Format (ESEF) mandate.
The ESEF mandate requires issuers to prepare their annual financial reports in a single standardised electronic reporting format. One of the key areas companies will be focusing on as they prepare for their reports is the application of the XBRL® tags to the International Financial Reporting Standards (IFRS) consolidated financial statements. This may be a completely new experience for many companies.
The reality is that selecting the most appropriate XBRL tag is essential and requires much more than just label matching. So how can you be sure you are making high-quality informed decisions in tag selection?
Workiva – the global leader in XBRL and Inline XBRL® software and one of the first companies to be certified by XBRL International – has again used its expertise to create a solution to this problem with the new Workiva XBRL Concept Recommendation System for ESEF.
The ESEF tagging tool uses machine learning to power a top five list for the most likely taxonomy concepts for a selected line item in annual reports.
Workiva analyzed and gathered data from over 2,000 Annual Financial Reports tagged for IFRS, and used the information to build its solution. When selecting a concept for a line item in financial statements, a list of recommendations of the most likely taxonomy concepts is populated. These recommendations will help kickstart the tagging and get the process moving more quickly. If financial reporting teams see concept recommendations with rankings of over 85% confidence, they’ll know where to begin. These choices reflect Workiva’s confidence in that selection based on the data gathered, proprietary machine learning, and extensive expertise.
However, it is still crucial to review and select elements based on the closest accounting meaning to the information being disclosed. It’s also important to note that the Concept Recommendation System for ESEF does not automatically apply tags to reports. This is to avoid the unnecessary effort of removing and re-adding tags during the review phase.
This fully integrated functionality allows teams to accelerate their process of tagging while simultaneously reinforcing the accuracy and consistency with peer companies. When compared to concept tagging solutions available today, it was found that the Workiva XBRL Concept Recommendation System for ESEF earns filers a 20% time savings in their tagging process. Additionally, the labels for ESEF taxonomy concepts can be translated into different languages without affecting the underlying concept or its fundamental accounting meaning.
2021 will no doubt continue to be a learning year for organizations across Europe, as they rebound from COVID-19 and reimagine work. Solutions that lead to time savings and process simplicity will be critical as these organizations work to meet changing regulations.
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