What is DQR?
The DQR tests are a set of taxonomy-specific automated data quality rules. In their current form they are provided by XBRL International as a beta programme in 2022. The rules are free to use and are aimed at helping ensure that Inline XBRL reports prepared in accordance with the IFRS taxonomy are free from a range of common errors.
The DQR tests are especially useful for companies that must file European Single Electronic Formatted (ESEF) and Structured Annual Financial Reports (SAFR) in the UK, but are relevant to all companies preparing Inline XBRL or XBRL formatted digital corporate reports that conform to the IFRS taxonomy. Note that US SEC filers should instead refer to the DQC initiative.
The DQR tests are a set of unambiguous rules that can programatically identify anomalies in IFRS based digital financial statements. They are in addition to ESEF and IFRS quality rules. They don’t replace them. They are entirely voluntary, but companies are encouraged to use them.
For example, one of the rules identifies situations in which companies have mistakenly tagged a percentage item as an integer, rather than as a decimal fraction. This DQR rule will provide a warning if a percentage appears in the generated XBRL data as an integer greater than 11.
Warning messages that are generated by running the DQR rules should be carefully reviewed by companies and their advisers as the rules are designed in a conservative manner: a false positive is extremely unlikely.
DQR rules are not mandatory or normative, but are highly encouraged. Enhancing data quality in digital reports is an important aspect of digital corporate reporting.
Who should use the DQR tests?
European issuers and UK issuers need to file their Annual Financial Reports in Inline XBRL format using the IFRS taxonomy. All public companies that come under these regulations, as well as companies that prepare Inline XBRL or XBRL formatted digital corporate reports in accordance with the IFRS taxonomy in other jurisdictions are encouraged to use the DQR tests. To take advantage of these additional quality tests, software and service providers should embed the DQR rules into their operating procedures and systems.
XBRL International will, in due course, provide a range of statistics to help users and preparers understand the impact of the DQR tests.
In 2022 the DQR initiative is in “beta”, while the impact of the rules is evaluated, software vendors and companies get used to the capabilities of this kind of testing and software gets certified.
How can I use the DQR tests?
To run the DQR tests you will need to use software that run the tests programatically. We expect that most software vendors that deliver IFRS based financial reports will incorporate these capabilities quite shortly.
What should software vendors and service providers do?
Software vendors and service providers should consult this page to find out how to embed DQR tests in their systems.
What if my software already supports the US DQC tests?
The DQR tests in 2022 are a subset of a group of proven IFRS-specific rules that SEC issuers use to improve the quality of their filings before submitting them to the US EDGAR portal. In practice what that means is that software that is already DQC capable will be able to support DQR tests almost immediately.
What can auditors do?
Auditors should be using XBRL Review tools to help them assess draft financial statements that have been tagged. Review tools should support DQR rules.
What should issuers do?
Issuers need to develop a set of digital reporting-specific disclosure policies, procedures and controls to ensure that their digital reports are accurate and meet the needs of users. One of those steps should be to execute and assess the results from a range of automated testing, including automated taxonomy-specific quality rules. The DQR tests provide additional and voluntary confirmation that a range of common errors are not present in a filing. They are voluntary but will help improve the quality of reports being provided to market participants. Typically these tests should be run every time there is a change made to a draft filing. They should be run before the draft filing is provided to third party reviewers such as auditors and prior to filing with the relevant regulator/exchange or OAM.
Next steps for DQR
The DQR rules will be enhanced and expanded over the course of 2022. Interested stakeholders should subscribe to the DQR mailing list.