Preparing for the new IFRS, FRS 101 and FRS 102 taxonomies. White paper. Information Fee Protection Software Magazines Professional Development

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1 Preparing for the new IFRS, FRS 101 and FRS 102 taxonomies White paper Information Fee Protection Software Magazines Professional Development

2 Contact Details Website London 145 London Road Kingston Upon Thames Telephone: Surrey KT2 6SR Facsimile: United Kingdom Software Support Telephone: Website: Dublin Wolters Kluwer (Irl) Limited T/A CCH Software First Floor, Unit 7 B Global House Forest Park Mullingar Co. Westmeath Telephone: Ireland Facsimile: Software Support Telephone:

3 Contents Preparing for the new IFRS, FRS 101 and FRS 102 taxonomies 1 Background 1 The new taxonomies and the FRC Consultation 1 CCH ixbrl Review & Tag 1 Taxonomy changes and new concepts 2 What about FRSSE Accounts? 9 Enhancements to CCH ixbrl Review & Tag to cater for and take advantage of the new Taxonomies 10 Groupings 12 Unable to tag based on template in first year 14 II

4 Background Following the publication of the IFRS for SMEs, specifically designed as an international standard suitable for non-publicly accountable entities, the Accounting Standard Board (ASB) (now the Financial Reporting Council (FRC)) started a project to consider how this could be adopted for the UK and the Republic of Ireland. This project resulted first in the draft FRSME (Financial Reporting Standard for Small and Medium Sized Entities) which evolved into FRS 100, 101 and 102 that were issued in 2012 and 2013 with FRS 103 being added in 2014: FRS 100 Application of Financial Reporting Requirements which basically explains who does what under new UK GAAP; FRS 101 Reduced Disclosure Framework which allows subsidiaries and parents to use IFRS with reduced disclosures; FRS 102 the Financial Reporting Standard applicable in the UK and Ireland, which replace current SSAPs and FRSs FRS 103 on Insurance contracts The new reporting standards are mandatory for periods commencing on or after 1 January 2015 and early adoption is permitted. As a result of these new UK GAAP accounting standards, new taxonomies are required to allow the tagging of ixbrl accounts. In addition, the FRC have taken the opportunity to create a new IFRS taxonomy as the existing one was considered not fit for purpose. The new taxonomies and the FRC Consultation The existing taxonomies were originally created by a non-profit making organisation called XBRL UK Limited which is the UK jurisdiction of the XBRL International consortium. However with the adoption of ixbrl by HMRC and Companies House, it was decided that governance of the taxonomies should reside with the organisation that was responsible for the accounting standards, the FRC, and they have been responsible for the generation of the new taxonomies. The FRC started the creation of the new taxonomies in 2013 and CCH have been part of a closed group consulting on and reviewing these. Drafts of the new taxonomies were issued in May and were subject to a two month public consultation that ended on 8 July 2014 and the final taxonomies were issued in September The purpose of this document is to help you understand the new concepts and changes that have been incorporated in the new taxonomies. CCH ixbrl Review & Tag We have implemented the final taxonomies in CCH ixbrl Review & Tag and enhanced the program to support and take advantage of some new concepts they introduce. Further details of these are set out below and we will be releasing these with the Q3 release of CCH ixbrl Review & Tag. HMRC will not be able to accept accounts tagged with these new taxonomies until the end of 2014 but we are releasing these early to enable our users to familiarise themselves with the new taxonomies and concepts. Use of the new taxonomies for IFRS and FRS101/102 accounts will be mandatory from April PREPARING FOR THE NEW IFRS, FRS 101 AND FRS 102 TAXONOMIES - SEPTEMBER

5 Taxonomy changes and new concepts The FRC have released three new taxonomies: Full IFRS for UK companies: for accounts prepared in accordance with EU-adopted IFRS. FRS 101, Reduced Disclosure Framework: for accounts prepared in accordance with FRS 101, which enables subsidiaries and ultimate parent companies to take advantage of disclosure exemptions in comparison to the requirements in full IFRS. FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland: for accounts prepared in accordance with FRS 102, which covers all other UK entities above the smaller entity threshold. The three standards share a range of common accounting concepts. This reflects the fact that in developing FRS 101 and FRS 102, the FRC aimed to provide standards consistent with international accounting standards through the use of an IFRS-based solution, unless there was a clear need for an alternative approach in specific areas. The FRC accounts taxonomies thus contain a common core taxonomy, which defines the XBRL tags for accounting concepts and determines the key features of the design. Each individual taxonomy extends this core taxonomy so that it presents the range of tags which are appropriate for the standard concerned. The taxonomies also contain common components to handle basic entity and business report data, the Directors Report, the Audit Report and an Accountant s Report. The FRC taxonomies cover the reporting requirements for typical commercial and industrial entities and contain additional sections to meet the requirements of the banking and finance sector and the extractive industries sector, including mining, oil and gas. The taxonomies may be extended over time to cover further standards and the requirements of specific industry sectors. An example is FRS 103 for insurance entities. New structure and order The new taxonomies have a more logical structure in that they have been simplified in a number of areas and the label and names are more consistent and in some cases more informative, for example Boolean tags now have (true/false) at the end of the name. It should therefore be easier to find the tag you are seeking and have a better understanding of each tag s intended use. Improved user guidance Guidance tags In addition to the heading labels that, as in the existing taxonomy, are used to group tags into logical sections, the use of guidance items has been greatly increased. Guidance items are entries that appear in the taxonomy purely to inform the user of aspects they should consider when applying the tags within the section, e.g. dimension use, or information about the tags in the section. They contain [guidance] at the end of their labels and you cannot apply these items as tags to a document. Figures 1 and 2 overleaf show examples. 2 PREPARING FOR THE NEW IFRS, FRS 101 AND FRS 102 TAXONOMIES - SEPTEMBER 2014

6 Figure 1 Example of guidance on dimension use Figure 2 Example of information Document field A number of tags have had a documentation field provided to give guidance on how the tag should be applied and interpreted. The field is only used where such guidance is necessary. The majority of tags do not carry such guidance. However, where it exists, documentation guidance is important to understanding the correct use of a tag. Figure 3 shows an example of a documentation field. Cross-references Figure 3 Example of a documentation field The new taxonomies have extensive cross-references included. Cross-reference items are entries that appear in the taxonomy to indicate to the user that related information and tags are present in another section of the taxonomy. They link to the section referred to and are intended to help users navigate efficiently through the taxonomy. They contain [crossreference] at the end of their labels and you cannot apply these items as tags to a document. Figure 4 overleaf shows an example. PREPARING FOR THE NEW IFRS, FRS 101 AND FRS 102 TAXONOMIES - SEPTEMBER

7 Accounting references Figure 4 Example of a cross-reference items Accurate references to financial reporting standards and other authoritative literature have been provided, assisting with the confirmation of the meaning of a taxonomy tag and the authority for its use. References in the new taxonomies adhere to the following practices: 1. All accounting line item tags carry one or more references to accounting standards, see the example below in Figure References identify the basic standard to which they relate, such as IFRS and FRS 102, together with the section, paragraph or schedule covering the disclosure the tag applies to. 3. Taxonomies also include references to the Companies Act, Auditing Standards and other official publications, where appropriate. Figure 5 Example of multiple references 4 PREPARING FOR THE NEW IFRS, FRS 101 AND FRS 102 TAXONOMIES - SEPTEMBER 2014

8 Typed dimensions A new concept of typed dimensions has been included which are a special type of dimension. The existing dimensions are explicit in that they contain a set of specific, predefined dimension members with predefined descriptions. For the new typed dimensions, the members are simply an integer used to define a connected set of tags or to differentiate multiple items that you need to tag with the same tag and explicit dimensions. Analysis tags The first use of typed dimensions is to provide an anonymous dimension that enables a line item tag to be reused any number of times in a report. Line items tags known as analysis items have been included in a number of sections of the taxonomies to enable the tagging of entries in accounts for which no specific tag exists. For example, if you have analysed debtors in the report and disclosed component items for which no specific tag exists, you can use the new tag Further analysis of debtors multiple times, allocating each line a different Analysis dimension to differentiate it. Each analysis item tag is specific to the section in which it appears and is defined as a component of the total monetary value for the section. The description of most tags that permit the use of a typed dimension start with Further and end with [component of ]. Groupings Figure 6 Example of an analysis item tag As before, a grouping is used to contain tags which describe related aspects of a particular piece of information and which are expected to be used in combination. Such tags will only be properly understood when seen in conjunction with one another. A grouping may often need to be used repeatedly in an XBRL report in order to cover multiple occurrences of the particular piece of information it describes. Each set of entries in a grouping are no longer linked by tuples but are now identified by the use a common typed dimension i.e. each set of related data will have the same dimension member selected. This is more a technical change to the format of the ixbrl file and, as you will see in the section below dealing with CCH s implementation of the new taxonomies, we are still providing you with a text label by which you can easily identify members of the same group. Note that in FRS102 the taxonomy has followed the format of the old IFRS taxonomy for related parties. Related party tags are therefore no longer a grouping but are now tagged with explicit dimensions. See below for further details. PREPARING FOR THE NEW IFRS, FRS 101 AND FRS 102 TAXONOMIES - SEPTEMBER

9 Cash flow tags now have balance types Balance types have been applied to cash flow and similar data using the convention that credit represents an outflow of cash while debit represents an inflow. This is consistent with increase in cash being a debit. This approach has been supplemented by specific links in the taxonomy definition section which identify cash inflow and outflow items. This is good news as in UK GAAP these balances were not set and hence the user was more likely to make an error when applying the tag. However, HMRC have emphasised that the setting of the correct sign continues to rely on the label of tags. The balance attribute remains a supplementary aid; the label always takes priority in determining sign. Related Party Transactions As indicated above, the related party tags are no longer part of a grouping. These tags are now linked together by the use of explicit dimensions. To accommodate this, there is a significant increase in the dimensions members available when using a related party tag. In UK GAAP, the related party tags were as follows: Figure 7 Existing Related party tags 6 PREPARING FOR THE NEW IFRS, FRS 101 AND FRS 102 TAXONOMIES - SEPTEMBER 2014

10 In the new taxonomies they are: Figure 8 New Related Party Tags The new dimensions available are as follows: Figure 9 New Related Party Dimensions PREPARING FOR THE NEW IFRS, FRS 101 AND FRS 102 TAXONOMIES - SEPTEMBER

11 The members of the Related Party dimension identify the related party type thereby providing an association with the related party name and are extensive: Figure 10 New Related Party Dimension members Where the name of the party for which a related party dimension member has been used is defined by a name tag elsewhere, you do not need to apply the name or description of the related party tag. But you do need to use these for cases, such as Close family member 1 where the name only appears in the related party note. The link between entries is made by the entry having common dimension members for Related parties and Related party transaction type. For example: Figure 11 Example of use of the related party dimensions 8 PREPARING FOR THE NEW IFRS, FRS 101 AND FRS 102 TAXONOMIES - SEPTEMBER 2014

12 Accounts status, audited or unaudited In UK GAAP there was no tag indicating if the accounts were audited, this was inferred by the application of other tags such as those relating to the audit opinion. In the new taxonomies there is a tag for the accounts status which has the following dimensions: Figure 12 New Accounts status tags We have added this tag to the Other data tag list as it is a fixed tag which does not have to be applied to a value on the face of the accounts. No minimum tagging list There is no concept of a minimum tagging list in the new taxonomies hence all elements of the accounts for which there is an appropriate tag must be tagged. Although the number of tags in the new taxonomies is slightly less than those in the existing UK GAAP and UK IFRS taxonomies, there are still a significant number of tags and there will therefore be far more items to tag with the new taxonomies. What about FRSSE Accounts? While the existing FRSSE remains in force, there will be no change in the tagging requirements for FRSSE accounts. The existing minimum tagging list will be retained and hence you will be able to use your existing processes for these, including the ability to roll forward tags in CCH ixbrl Review & Tag. However the FRC have now issued their consultation document on the future of the FRSSE Consultation Document Accounting standards for small entities. The proposal, on which they are seeking comments by 30 November 2014, is that the FRSSE be withdrawn and replaced with a new FRSME Financial Reporting Standard for Micro-entities and that small companies be brought within the scope of FRS 102 but with fewer mandatory disclosures. It is proposed that new financial reporting framework will be effective from 1 January If the new proposals are adopted, which is considered by many a forgone conclusion, we anticipate that there will be a new Micro-entity taxonomy and small companies will in future have to be tagged with the new FRS 102 taxonomy. PREPARING FOR THE NEW IFRS, FRS 101 AND FRS 102 TAXONOMIES - SEPTEMBER

13 Enhancements to CCH ixbrl Review & Tag to cater for and take advantage of the new Taxonomies We have enhanced CCH ixbrl Review & Tag to take advantage of the new concepts included in the taxonomies: Guidance documentation We have extended the Tag Properties panel to display the new documentation label. These details are displayed when a tag is selected in the taxonomy panel and will help you identify where the tag is to be applied on the accounts. Figure 13 Documentation field References hyperlinked to CCH Online We have also extended the Tax Properties panel to display the reference label. We have formatted these so that they are in a familiar form and are easy to read rather than simply display the separate elements of the reference as included in the taxonomy. Figure 14 Reference field hyperlinks The references are presented as hyperlinks that you can use to quickly access CCH Online to research the disclosure that the tag relates to. Simply clicking on the hyperlink with the left mouse button will open your browser and, providing you have a subscription, search CCH Online for the reference. For example clicking on SI 2008/410 Sch 1 Part 1 Section B will result in the following search results being displayed (overleaf): 10 PREPARING FOR THE NEW IFRS, FRS 101 AND FRS 102 TAXONOMIES - SEPTEMBER 2014

14 Figure 15 Example of a search of CCH Online If you wish to refine your search before accessing CCH Online, right mouse click on any reference and the Search CCH Information dialog will be displayed: Figure 16 Using the Search dialog PREPARING FOR THE NEW IFRS, FRS 101 AND FRS 102 TAXONOMIES - SEPTEMBER

15 Using this dialog, you can select the reference to search by clicking on the line containing the reference, and the system will copy the reference into the Search for field. Note that the appropriate Search in radio button will also be selected to indicate the relevant area of CCH Online to be searched. You are free to edit the search string or change the area to be searched before clicking on Search. You can also use this dialog to search for references and text that is not shown in the grid, simply type the string in the Search for field, select the Search in area and click on Search. Cross-references in taxonomy We have added functionality to make use of the cross-reference tags. These are presented in the taxonomy tree as hyperlinks which, when clicked, will reposition the taxonomy display to show the section of the taxonomy referred to. This will make it easier for you to quickly find the correct tag if you started looking for a tag in a wrong but related area. Groupings Figure 17 Example of a cross-reference items As indicated, tags in groupings are no longer linked together using tuples. In their place a typed dimension is used where the member is simply an integer used to link tags together. This is more of a technical change than a conceptual shift and we are therefore retaining the concept of being able to identify the grouping within CCH ixbrl Review & Tag by a meaningful name and the system will then substitute an integer associated with this for the type dimension member when the ixbrl file is generated. For example, if you were applying tags to a list of material bank loans from this grouping (overleaf): 12 PREPARING FOR THE NEW IFRS, FRS 101 AND FRS 102 TAXONOMIES - SEPTEMBER 2014

16 Figure 18 Material bank loan grouping When you apply either tag, say the description tag, the Select Group dialog will appear. Figure 19 Select Group dialog On first display this will have a default entry which you can use or you can enter a meaningful name to be used for the loan, e.g. HSBC. The first group name entered will replace the default entry and will be allocated dimension member 1. You can then easily identify the correct group dimension member to associate with the amount tag when used. Further loan description and amount tags can be allocated a different meaningful name, e.g. Figure 20 User defined group names When you view the tag in the Edit tag dialog, the type dimension, called x [grouping name], is shown with members identified by the names you have allocated them rather than an anonymous integer. PREPARING FOR THE NEW IFRS, FRS 101 AND FRS 102 TAXONOMIES - SEPTEMBER

17 Figure 21 Typed dimension members Unable to tag based on template in first year In addition to the changes referred to above, significant changes have been made to tag names and dimensions both in the new IFRS and as well as in the new UK GAAP taxonomies. This means that it will not be possible to use the previous period s accounts as a template for tagging the current period for the first time that you adopt the new taxonomies for each entity. It will, of course be possible to carry forward the tags, using the template facility, in future years. 14 PREPARING FOR THE NEW IFRS, FRS 101 AND FRS 102 TAXONOMIES - SEPTEMBER 2014