Learning Objectives

By the end of this section, readers will be able to:

  • Identify the challenges that small entities face when adopting digital reporting solutions
  • Evaluate various support strategies that data collectors can implement to assist small entities
  • Compare different software development approaches for XBRL reporting solutions
  • Assess real-world implementation examples from multiple jurisdictions and understand how different data collectors have addressed small-entity needs

Reporting Challenges for Small Entities

Small report preparers face distinct barriers when adopting digital reporting solutions. These challenges stem from their size, structure, and available resources.

Limited internal resources create the most immediate obstacles. Small entities typically lack dedicated IT staff or compliance specialists who can navigate technical reporting requirements. Unlike larger organisations, they cannot easily absorb the costs of specialised software or external consultants. It is worth noting that digital tagging typically represents a small fraction of total reporting costs, and in many markets software options targeted at smaller entities are available. Nonetheless, budget constraints mean that even modest expenses for XBRL-related tools or professional advice can represent a significant burden for this group of reporting entities.

The complexity of reporting frameworks presents another major hurdle. Small entities often struggle to understand comprehensive policy requirements, particularly when these frameworks are designed with larger organisations in mind. Technical reporting standards, including XBRL taxonomies, can appear overwhelming to businesses without in-house expertise. The relationship between different reporting requirements and how they connect to business operations may not be immediately clear to small entity managers.

Risk concerns compound these difficulties. Small business owners frequently worry about penalties resulting from inadvertent non-compliance, especially when reporting requirements are complex or unclear. The potential for reputation damage or financial consequences creates additional pressure, particularly for entities that lack the resources to recover quickly from compliance failures.

These interconnected challenges mean that small entities require targeted support to participate effectively in digital reporting programmes. Solutions must address resource limitations whilst simplifying technical complexity and reducing compliance risks.

Supporting Small Entities

Data collectors can implement several complementary approaches to help small reporting entities overcome the barriers to adopting digital reporting requirements. These options work together to create a more accessible reporting environment which addresses the specific needs of small enterprises. Throughout all of these processes it is essential to engage smaller entities from the outset, through focus groups, pilots, consultations and any other effective channels, to ensure they are guided by real-world needs and experience. This is particularly important in a staged rollout where large entities are the first to implement XBRL, and can otherwise dominate the feedback on a developing reporting framework.

Supporting Small Entities

Establishing a Dedicated Policy Framework

When establishing reporting policy frameworks, regulators and data collectors can design them in a way that recognises the different needs of small report preparers. Simplified reporting scenarios that limit the scope and/or depth of information to be reported allow smaller organisations to meet their obligations without the complexity required for larger entities. This approach acknowledges that small entities typically have less complex business structures and may not need to report the same level of detail as multinational corporations. These policy frameworks tend to differentiate data scope and other reporting requirements by entity size, as measured by its book value, total revenue, or other relevant metric.

Focused Taxonomies Reduce Reporting Complexity

Assuming that the established reporting policy framework addresses the specific needs of small companies, a well-designed taxonomy can additionally reduce the reporting challenge by establishing specific taxonomy entry points that contain only the concepts relevant to smaller organisations. Rather than requiring small entities to navigate comprehensive taxonomies designed for all entity types, these focused entry points present a simplified scope of reporting requirements. This reduces the cognitive burden on preparers and minimises the risk of selecting inappropriate concepts or missing required information. Importantly, simplified taxonomies for small entities can only be created when the regulatory policy framework itself establishes differentiated reporting requirements. Without policy-level simplification provisions, taxonomy authors lack the mandate to reduce reporting complexity in this way.

Software Solutions Bridge Technical Gaps

Technical tools can bridge the gap between unfamiliar XBRL requirements and limited small-entity technical capabilities. Data collectors can provide or facilitate access to software solutions that generate XBRL reports without requiring technical expertise. These tools translate familiar business information into the structured format required for digital reporting, hiding the technical complexity from users whilst ensuring compliance with reporting standards.

Training and Support

Training and support infrastructure helps build confidence and competence among small-entity preparers. Multiple delivery channels can accommodate different learning preferences and resource constraints. Online video tutorials provide flexible, self-paced learning opportunities that preparers can access repeatedly. Real-time assistance through help desks or automated chatbots may offer immediate support when preparers encounter specific challenges. In-person workshops create opportunities for direct interaction and can address common concerns within the local business community.

These approaches work most effectively when implemented together. Only then can they create a comprehensive support ecosystem that addresses the resource, complexity, and risk challenges faced by small entities.

Provide User-Friendly XBRL Reporting Applications

Understanding how to make XBRL reporting accessible requires focusing on the user experience rather than the underlying technology. The goal is to offer reporting tools that feel familiar and straightforward to small-entity preparers, regardless of the technical sophistication behind the scenes.

The core principle centres on hiding technical complexity whilst maintaining reporting accuracy. Small-entity preparers should interact with interfaces and workflows that match their existing business processes and comfort levels. This means designing applications that translate familiar business concepts into the structured XBRL format without requiring users to understand taxonomies, dimensional structures, or validation rules (https://www.xbrl.org/guidance/xbrl-glossary/#validation-rules). The application handles all technical requirements automatically whilst presenting information in terms that business users recognise and understand.

Preconfigured templates and guided workflows eliminate much of the complexity associated with XBRL reporting. Rather than presenting preparers with comprehensive taxonomies, effective tools provide structured pathways that collect only the information relevant to small entities. Built-in validation ensures data quality without requiring preparers to understand the underlying business rules. Error messages appear in plain language with clear guidance on how to resolve issues. The final XBRL output generation happens automatically, producing technically compliant reports from business-friendly input processes. For some types of standardised disclosures, template-based reporting is the right choice for all entity sizes, whereas for more variable disclosures, such as financial statements, larger companies need more flexible and sophisticated reporting options. Some data collectors allow smaller entities to prepare and submit their own reports if they choose, while providing an accessible reporting tool that will be preferred by most smaller entities.

Clear validation feedback helps preparers identify and correct issues before submission. When validation rules detect problems, the application should offer clear explanations of what needs to be corrected and why. Rather than displaying technical error messages, effective tools translate validation results into business language that explains the issue in terms of the reported information. Interactive feedback allows users to navigate directly to the specific data fields or sections that require attention, eliminating the need to search through complex forms. Visual indicators, such as highlighting or colour coding, can guide preparers to problem areas whilst providing contextual help that explains how to resolve each issue. This approach transforms validation from a technical hurdle into a helpful quality assurance process that builds confidence in the final submission.

Security considerations become particularly important when handling sensitive business information through digital reporting tools. Small entities often lack dedicated IT security expertise, making them vulnerable to data breaches or unauthorised access. XBRL reporting applications must incorporate robust security measures including secure data transmission, appropriate access controls, and protection of stored information. Cloud-based solutions require particular attention to data encryption and compliance with local data protection regulations. Security measures should operate transparently to users, providing protection without adding complexity to the reporting process. Clear privacy policies and data handling procedures help build trust among small-entity preparers who may have concerns about sharing sensitive business information through digital platforms.

Testing with actual small-entity preparers during development helps identify usability issues and ensures that design decisions truly address user needs. Testing with real preparers, rather than relying solely on technical specifications or assumptions, reveals practical challenges that may not be apparent to developers preparing the target solution. This user-centred approach can identify confusing navigation patterns, unclear terminology, or missing functionality before full deployment. Testing should include preparers with varying levels of technical expertise to ensure the solution works for the full range of intended users. Feedback from these testing sessions often leads to important design improvements that reduce training requirements and increase overall user satisfaction.

Familiarity becomes the foundation for successful XBRL adoption. Therefore, it is particularly helpful to offer XBRL-aware tools built upon the reporting methods and software environments that smaller entities already use for other regulatory obligations. Where reporting entities in a given jurisdiction commonly use spreadsheet applications for tax reporting, XBRL tools should integrate with or replicate that experience. Where web-based government portals are standard for other compliance activities, XBRL reporting should follow similar navigation patterns and visual design principles. This approach reduces learning curves and builds confidence among preparers who can transfer existing skills to the new reporting requirement.

The local context determines the most appropriate implementation approach. Existing solutions from other jurisdictions can provide valuable insights, but should not necessarily be directly replicated. Different jurisdictions have varying levels of digital infrastructure, software preferences, and existing reporting traditions. As an example, in regions where internet connection is unstable and often interrupted, offering a web-based interface is not the optimal solution, as users may encounter temporary internet connection problems which may force them to re-enter information into the web-based form. In such a case, a more suitable solution would be downloadable applications that work offline, allowing companies to generate and validate the XBRL report locally and only use an online connection to upload the file to the data collector’s portal. The choice between different technical platforms should reflect what preparers already use and trust for similar business activities.

These design principles ensure that small entities can participate in digital reporting programmes without needing to become XBRL experts, whilst still producing high-quality, structured data that meets regulatory requirements.

XBRL Software Development Options

Data collectors have several strategic options when developing XBRL-capable software solutions. The choice depends on available resources, technical capabilities, and regulatory priorities.

XBRL Software Development Options

Developing In-House XBRL Systems

Developing solutions using internal technical capacity represents one approach for data collectors with sufficient resources and expertise. This may involve creating entirely new applications or updating existing systems to support receiving, validating, and storing XBRL data. Internal development provides complete control over functionality, user interface design, and integration with existing regulatory systems. However, this approach requires significant investment in XBRL expertise and ongoing maintenance capabilities.

Partnering with Vendors

Partnering with third-party software providers offers an alternative path that leverages existing commercial solutions. Data collectors can collaborate with established software providers to create locally tailored applications or to offer solutions through existing accounting, reporting, or tax compliance portals or software products that small companies already use. This approach can reduce development time and costs whilst building upon proven technology platforms.

Use of Open-source Solutions

For both of the above-mentioned scenarios it may be possible to leverage existing open-source components to provide the building blocks for XBRL functionality without starting from scratch. Established tools such as Arelle for data validation or RECEiX for creating XBRL reports offer tested, community-supported foundations that can be integrated into larger solutions. Open-source components reduce development costs and benefit from ongoing community improvements, though they may require technical expertise to implement and maintain effectively.

Establishing a Market Ecosystem

Alternatively, data collectors may choose to focus their energies on establishing a market ecosystem, creating enabling conditions rather than providing software directly. HMRC’s third-party software-first approach in the UK demonstrates this strategy. HMRC works to “remove barriers to entry into the market, allowing for innovation and increasing competition,” and offers Application Programming Interfaces (APIs) that allow existing software vendors to integrate XBRL functionality into existing tax reporting tools. Under this model, data collectors provide technical infrastructure, standards, and support whilst allowing market forces to determine pricing, features, and user experience. In such scenarios, data collectors may maintain lists of commercial software suppliers who provide the required functionality, creating transparency whilst avoiding direct involvement in software provision.

The ecosystem approach can foster innovation and competition whilst reducing the regulatory burden of software development and maintenance. However, it requires careful attention to ensuring adequate coverage for small entities and maintaining appropriate quality standards across multiple software providers.

Existing Solutions Offered by Data Collectors

Below are examples of data collectors that were or are actively engaged in providing and maintaining software for generating XBRL reports:

  • NSE India developed an XBRL-based compliance filing mechanism through its NSE Electronic Application Processing System (NEAPS) platform to streamline regulatory reporting for listed companies. This initiative addressed the challenge of multiple, redundant filings across different stock exchanges and the Ministry of Corporate Affairs (MCA) by adopting the standardised XBRL format.

    The platform offers two flexible approaches for XBRL compliance. The first allows for automatic generation of XBRL files whereby report preparers can continue using the familiar NEAPS data entry/file upload interface. The system automatically converts submitted reports into XBRL format through a built-in utility, allowing companies to download these XBRL files for use with other regulatory bodies. The second offers direct XBRL upload, whereby reporting entities can upload pre-generated XBRL files from their back-office systems or utilities provided by other third parties directly into NEAPS.

  • The Ukrainian Financial Reporting System (FRS) is a centralised digital reporting platform that serves as Ukraine’s national collection centre for financial statements in XBRL format. It includes built-in tools that enable companies to prepare and convert their financial statements into XBRL format. Companies can access the latest UA IFRS XBRL Taxonomy (currently version 2024 v1.1) directly through the FRS platform. The solution also offers uploading of XBRL files generated using companies’ own accounting software or third-party solutions directly into the FRS system.

  • The Accounting and Corporate Regulatory Authority (ACRA) is the national regulator of business entities, public accountants and corporate service providers in Singapore, which mandates XBRL for collection of financial statements. It offers a comprehensive XBRL filing ecosystem through its BizFinx preparation tool and BizFile+ portal to facilitate standardised digital financial reporting.

    The free BizFinx Preparation Tool allows companies to prepare XBRL financial statements using source documents in Microsoft Word or Microsoft Excel format from their Annual General Meeting (AGM).

  • EIOPA T4U was a specialised software application developed by the European Insurance and Occupational Pensions Authority (EIOPA) to assist insurance firms, particularly small and medium-sized undertakings, in meeting the XBRL reporting requirements under Solvency II regulations. The tool provided a simple and basic software solution to create and validate XBRL reports from templates during the initial implementation years of XBRL reporting requirements. T4U was specifically designed to help firms without XBRL knowledge implement Solvency II harmonised quantitative reporting in XBRL format. The tool primarily aimed to assist undertakings that might suffer from a lack of resources or technical expertise to create XBRL submissions in time for regulatory deadlines, particularly during the first submission periods when the industry was adapting to the new reporting requirements.

    While T4U served a crucial role during the initial implementation phase of Solvency II XBRL reporting, EIOPA has since discontinued the tool. This reflects the maturation of the XBRL reporting ecosystem, with commercial software vendors now offering comprehensive solutions and undertakings having developed internal capabilities for XBRL reporting. The insurance industry has successfully transitioned to using various commercial and proprietary solutions for its ongoing Solvency II XBRL reporting obligations.

Summary

When developing or facilitating XBRL reporting solutions for small entities, data collectors must engage real-world preparers, consider their unique needs, and balance multiple factors that influence both immediate success and long-term sustainability.

User experience becomes critical for adoption, particularly among non-technical users who may lack dedicated IT support. Intuitive interfaces reduce training requirements and minimise the risk of user errors that could lead to compliance problems. Design decisions should prioritise clarity and simplicity over comprehensive functionality, recognising that small-entity users often prefer straightforward workflows over feature-rich applications. Testing with actual small-entity preparers during development helps identify usability issues before full deployment.

Interoperability is a key concept in supporting user adoption, ensuring that new tools work alongside existing business systems and processes. Small entities typically use established accounting software or spreadsheet applications for their financial management. XBRL solutions that integrate with or complement these existing tools face fewer adoption barriers than standalone applications requiring separate data entry. Compatibility with current and future taxonomy versions ensures that solutions remain useful as reporting standards evolve.

Security measures protect sensitive business information throughout the reporting process. Cloud-based solutions require particular attention to data encryption, access controls, and audit trails that demonstrate compliance with data protection regulations. Security frameworks should address both technical vulnerabilities and procedural risks, including user authentication, data transmission, and storage protocols.

Direct software provision by data collectors can be a transitional step rather than a permanent solution. While regulators may need to provide initial solutions to establish digital reporting programmes, long-term success is often cemented by creating market conditions where private sector providers can offer competitive tools and services for generating XBRL reports. The regulatory role evolves from software provider to ecosystem enabler, focusing on standards development, quality assurance, and market facilitation rather than direct service delivery.

This strategic evolution allows data collectors to concentrate resources on core regulatory functions whilst encouraging innovation and competition in the software market. However, the transition requires careful timing and attention to market development to ensure adequate coverage for all entity types, particularly those with limited resources or complex requirements.