Experience with block tagging from PDF

What has been mandatory throughout the EU for a number of years will probably soon become a reporting reality in Switzerland as well. Specified figures and content, in Switzerland initially those with ESG relevance, must be prepared and published in a way that is readable for humans and machines.

Annual reports of listed companies must be "tagged" in the EU - more precisely, relevant information coded and uploaded to the online portal of the Bundesanzeiger in Germany, for example. Tagging can be done in two different ways and is handled differently by the publishing companies: either directly, during the creation process, so-called "built-in", or downstream, "bolt-on", from a PDF, often by an external service provider. And this is exactly where opinions differ - with the new regulatory requirements for additional tagging of the attachment, "block tagging".

In November 2022, the final version of the FAQ of the Institute of Public Auditors in Germany (IWD) on block tagging was published. This is based on a draft that was also made available to a working group of XBRL Germany for consultation in summer 2022. The final IWD FAQ, as well as the version of the ESEF Reporting Manual published this summer, now state that ESEF/XBRL files automatically converted from PDF are not machine-readable or are only machine-readable to a limited extent.

The reporting systems ns.publish and from mms solutions, on the other hand, due to their software architecture, comply in all respects with the requirements of the FAQ "Block tagging of the IFRS consolidated notes according to the ESEF regulation" and the decisive passage in the ESEF Reporting Manual (2.2.6 "Technical constructions of a block tag"). Although the FAQ, like the ESMA Reporting Manual, is not legally binding, it is an important guideline for auditors in Germany and is therefore highly relevant.

Great uncertainty among companies
The auditors' understanding that the common, automated conversions from PDF to ESEF/XBRL are not machine-readable and processable, or only to a limited extent, has led to many queries, discussions and great uncertainty.

The expectation of the German auditors is that the content of a block tag, which is read in from the file to be submitted (ESEF-ZIP) with an XBRL processor, is also understood by the machine in this way. The content of a block tag can contain between one word and several A4 pages of text (including tables, graphics, lists, etc.).

Disagreement on interpretation of EMSA regulation
Previously, without block tagging, the appendix did not fall under the (tagging) test, so this circumstance was not critical. However, that has changed with the new block tagging requirements. Since no currently known bolt-on PDF processing can meet the requirement of XHTML semantics without additional manual intervention, most German reviewers hold that the IWD rate the result as "not in compliance with ESMA regulation".

The "tagging plus" module from mms solutions takes a completely different approach: It generates "on-the-fly" the contents of the entire annual report in XHTML format. This is another significant advantage over most current system solutions, which are often limited to the financial section. Tagging plus is thus not only suitable for appendix tagging, but also for encoding all relevant information, i.e. already also for ESG reporting.

Would you like to learn more about XBRL, ESEF, iXBRL, XHTML and tagging plus? Contact us now. Our block tagging expert, Sacha Kälin, will be happy to answer your questions by email or phone: Switzerland +41 44 446 83 30 and Tel. Germany +49 69 247 43 62 00.

Or visit our webinar on reporting according to ESEF/XBRL. Register here for free.