Block tagging? Don’t sweat it.
It’s fair to say that everyone has a few questions about block tagging. Depending on how smoothly your previous experiences with tagging have been, it’s possible you might be feeling daunted by the prospect. But we have good news: there’s really no need to stress—particularly if you’re a Workiva customer.
Block tagging is the latest phase in requirements from the European Securities and Markets Authority (ESMA), stating that annual reports produced during the fiscal years on or after January 1st, 2022 will need to have the notes and accounting policies in the financial statements marked up section by section. This might sound like more work, but in practice it shouldn’t bring too much additional burden to your existing processes.
Assuming your company has already filed in accordance with the European Single Electronic Format (ESEF), you will already be familiar with the process of marking up your financial statements with individual XBRL® tags. While getting ESEF-ready wasn’t without its challenges, it wasn’t as painful as perhaps anticipated: a survey we conducted with Opinium Research earlier this year revealed that 71% of finance professionals found XBRL® tagging either easy or of average difficulty.
If applying individual tags was less tricky than expected, block tagging should prove to be far more straightforward. Rather than tagging individual figures, as in the main body of the report, block tagging requires you to mark up entire sections of text in your notes according to a series of predetermined note tags. Any information in the notes with a corresponding tag must be marked up in this way; if there is no appropriate tag for a particular section, none should be used.
Block tagging is not a significant change
To put our minds at ease, let’s take a closer look at what ESMA is mandating. Guidance can be found on p.25 of their ESEF reporting manual (last updated August 2022), which can be read here. This covers:
- The granularity of block tagging of notes and accounting policies (Guidance 1.9.2)
- Other considerations for block tagging of notes and accounting (Guidance 1.9.3)
- The technical construction of a block tag (Guidance 2.2.6)
The manual also contains visual examples of what text blocks look like within a document, as well as recommendations on aligning tagged facts with the human readable report:
“Issuers should ensure that the text content of the tag:
- Presents the words and numbers in the same order as the human readable report; and
- Where there is space between words and numbers in the source text, there is at least some space retained in the text block (i.e. “intangible assets 3m EUR” should not become “intangibleassets3mEUR” after extraction)"
ESEF Reporting Manual, ESMA, August 2022
In short, this new guidance is simply the next logical step in ESMA’s journey towards digitising annual reports and making financial disclosures more comparable.
Applying block tags in the Workiva platform
If you’re already a Workiva customer, there is even less reason to worry: Workiva already enables block tagging within the platform. Far from being a new capability, this has been an integral feature for years, used and trusted by thousands of organisations across the globe.
With XBRL® enabled, the Workiva platform makes it easy to select the portion of text you want to tag as a block, while giving you full control over any necessary edits. Because the platform is fully transparent and cloud-based, with all changes clearly tracked, you won’t risk accidentally deleting any important metadata hidden in files—making it as straightforward as possible to keep on top of all your tags. You can find more information on applying block tags in the Workiva platform here.
If you’re already a Workiva customer and would like a demonstration of our block tagging capabilities, your Professional Services or Customer Success Manager will be happy to help out. If you’re not yet a customer, you can request a 1:1 demo here.
As with all new reporting requirements, the key to success lies in having the right groundwork in place. Once you have a process that makes sense for your business (we created this kit to help you get started), ESEF compliance should be a breeze.
In the words of our customer JDE Peet’s: “next year will be a walk in the park—if there are no significant changes in our primary financial statements, I don’t see it taking us more than an hour in the future to ensure compliance with the ESEF mandate.”
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