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Open Accounting & Simplified Reporting: Solution Area B

Summary

The NSG&B working group on Open Accounting and Simplified Reporting has explored the diverse ways of reporting, formats and terminologies used in reporting and bookkeeping across different countries. Their research indicates that companies must adapt to varied national reporting requirements, creating administrative burdens. To address these challenges, the working group has developed a semantic model that facilitates interoperability by allowing financial statements to be “translated” across different systems without altering the original terms used by each country. This semantic model can be integrated into a unified Nordic API-gateway, aiming to standardise financial information access and promote a common financial vocabulary.
The report details additional challenges in three main areas: developing a common Nordic vocabulary for financial statements, addressing VAT reporting as well as exploring broader bookkeeping and reporting challenges in the Nordics.

Background

Simplified reporting involves streamlining the process of financial and regulatory reporting by reducing complexity and redundancy, thus making it easier for businesses to comply with the governmental requirements. Open accounting as a concept refers to the practice of making financial bookkeeping data more accessible and transparent, enabling easier data sharing and reporting between different entities.
Today, the integration of advanced digitalisation in reporting and bookkeeping enhances financial management through high accuracy and efficiency. The regulatory environment supports this by requiring clear and timely financial disclosures, which helps companies stay compliant and minimises the legal risks. The focus on systematic bookkeeping also curtails financial discrepancies and improves the overall business performance. However, challenges arise from the need to better integrate existing business data with the reporting requirements to ease the reporting burden and improve data quality. The main challenges of the whole area are:
    • Data Consistency and Structure: Varying needs for data across different authorities lead to inconsistent requests for the same data, causing burdensome reporting processes.
    • Access and Openness of Data: There is notable variability in how data can be accessed among Nordic countries, which complicates the application of uniform standards. The openness of registry data is also not uniform in all countries, which causes challenges for the businesses operating in the Nordics.
    • Use of Standards: The implementation and definition of standards vary by country, and standards are not always used comprehensively or consistently.
    • Cross-border Data Handling: Handling unstructured data and managing cross-border situations present significant challenges due to differences in the national standards and regulations.
    • Legislative Variability: The differences in the legislation, such as the application of reverse charge VAT, cause an additional burden for companies operating cross-border in the Nordics.
    It is noteworthy that these challenges are quite universal and do not affect just the Nordic region. The open accounting concept is especially hard to implement if standardisation and legal access to data is lacking.
    The primary stakeholders in the area are the companies themselves, which must report to various authorities overseeing their activities for both internal and external accounting purposes. Other significant external stakeholders include users of this information, such as the auditing sector, analysts, financial sector and credit rating agencies. Furthermore, software companies that develop accounting and reporting solutions for businesses are key stakeholders, as are participants in the accounting sector. The main challenges for stakeholders are very similar as listed above and the use of standards in a standardised manner is particularly valuable for them, as this helps improve processes throughout the financial data chain.

    Reflections on the scenario from Implementation Plan 2021

    The NSG&B Implementation Plan from 2021 outlines a future where SMEs provide real-time bookkeeping information (i.e. transaction and aggregated data) to third parties, banks, trade partners and public authorities in a standardised, structured format. This format facilitates automated interactions with various service providers, enhancing services while reducing costs. SMEs can easily switch service providers and business systems without losing vital historical data, automate accurate reporting to public authorities on matters like financial statements and tax declarations through standardised information exchange (e.g. via API connections), and allow public data access for statistical analysis or research. Automation promotes data accuracy and quality, aiding in effective policymaking, especially in crisis situations like the COVID-19 pandemic.
    While some countries already possessed some of these capabilities by 2021, challenges remain in achieving the necessary data standardisation and interoperability, particularly with concerns over trade secrets, data access and consent management. Variations in administrative cultures and political environments across Nordic countries further complicate the uniform implementation of this vision.
    The main challenge of interoperability was explored in more detail. Based on surveys and dialogue with stakeholders, the work was primarily focused on the following areas which are affected in cross-border situations:

    The NSG&B contribution

    1. Interoperability challenges of financial statements - a common Nordic vocabulary/​semantic model

    Challenge

    Nordic SMEs increasingly operate across borders, requiring seamless financial information exchange, particularly for trade partner assessment. XBRL reporting in Finland, Denmark and Sweden has streamlined some government reporting for SMEs, improving financial statement comparability and reducing the overall costs despite the implementation expense. However, lack of standardisation and documentation on local accounting differences complicates cross-border exchanges. The EU Accounting Directive aims to harmonise financial statement preparation for SMEs but allows flexibility in calculating figures, simplifying disclosure requirements and reducing the administrative burdens and costs.

    Contribution

    The SA-B working group created a model using common API definitions and a reference taxonomy based on the xEBR core reference taxonomy
    The xEBR core reference taxonomy is a standardized framework developed as part of the xEBR (European Business Register) initiative. It provides a common structure for defining and exchanging business and financial data across European business registers.
     in order to exchange financial statements in a structurally coherent form while documenting the local legal differences. This approach aims to harmonise the presentation of national financial statements, although interpretation must consider the varying legislation and accounting rules.
    Besides financial statements, SA-B experts explored other high-value datasets, including company information and accounting documents, to enable cross-border data applications with socio-economic benefits. The EU Open Data Directive encourages using existing standards for machine-readable company information, benefiting SMEs by providing free, trustworthy data.
    The outcomes from the NSG&B financial statement group include semantic mappings of Nordic financial statement concepts and API definitions for exchanging financial statements. The XBRL-JSON format
    XBRL-JSON is a format for representing XBRL (eXtensible Business Reporting Language) data in JSON (JavaScript Object Notation), which is a lightweight data interchange format. XBRL is widely used for digital business reporting, such as financial statements, regulatory filings, and other structured business information, while JSON is a popular format for transmitting data between web servers and browsers. The XBRL-JSON format was developed to make XBRL data easier to work with in modern web technologies and applications.
     was chosen for its extendability, and a pilot use case tested the developed specifications using synthetic data, supporting business ID proofs, signatory rights verification and financial risk assessments. These efforts aim to help Nordic SMEs exchange and benefit from open financial information, supporting government process automation and enhancing credit and trade partner evaluations.

    2. Interoperability challenges in the VAT reporting area

    Challenge

    Cross-border data exchange commonly occurs in day-to-day business transactions in the Nordics, with value-added tax (VAT) reporting being the most significant issue. The working group examined VAT reporting from an SME's perspective, analysing the journey from registration to tax return completion. Reverse charge VAT, where businesses must calculate and pay their home country’s VAT on certain purchases, was identified as a major pain point. This area lacks international common rules and is governed by national legislation, complicating cross-border transactions.
    Engaging accountants and financial managers through surveys and interviews revealed that reverse charge VAT significantly affects Nordic businesses. It is particularly challenging for SMEs, which may not know when to apply it. Moreover, eInvoices often lack sufficient information, and structured eInvoices are not widely used. Small businesses with occasional foreign trade face the largest reporting burden due to inexperience in handling reverse charge VAT.

    Contribution

    The working group created guidance on eInvoice content, distributed to project agencies for national sharing as the VAT in the Digital Age Directive advances. This EU directive supports transitioning from manual to digital invoicing for cross-border trade. The NSG&B SA-A working group pilot on reporting directive content provides a strong implementation basis. National improvement areas were identified, and input was given to the Nordic Tax Administrations’ cooperation forum. These efforts aim to reduce the reporting burden in cross-border situations by minimising manual accounting tasks.

    3. Challenge of differing degrees of the digitalisation of reporting

    Challenge

    The varying levels of digitalisation and differing national practices in the Nordics impose significant burdens on companies, requiring them to adapt to multiple reporting regimens. An analysis by the working group highlighted substantial differences in taxonomy-based reporting structures and digitalisation levels across Nordic countries. The group noted that cultural and political approaches to standardisation and automation vary widely, with some countries focusing on legal development and others on collaborative, compliance-by-design methods.
    Continuous stakeholder engagement revealed that the adoption of modern accounting systems is crucial for enhancing digital reporting capabilities. Stakeholders called for legislative guidance and support to standardise accounting systems and promote the use of digital business documents. Despite existing good standards, their inconsistent application hinders interoperability. Key expectations from stakeholders include harmonising legislative frameworks across countries, providing better guidance on new reporting obligations, reassessing outdated requirements and ensuring the availability and quality of registry data. A unified approach by Nordic agencies could enhance interoperability, ease business partner assessments and effectively address future reporting needs.

    Contribution

    The analysis of Nordic accounting and reporting practices highlighted significant disparities in digitalisation, standardisation and automation across these countries. The project examined the taxonomy-based reporting structures and the use of structured data, revealing technological, cultural and political differences. The key challenges include varying national legislation, uneven digital implementation and the inconsistent use of standards. Increased cooperation is essential to build interoperability in semantic, technical, administrative and legal areas.
    National pilots, such as Statistics Norway’s use of the SAF-T file for statistical queries and Finland’s Real Time Economy (RTE) project on Accounting and Audit Vocabulary, demonstrated successful strategies for reducing reporting burdens and bridging technical standards. Future cooperation should focus on advancing interoperability in the identified areas to create more efficient, unified and transparent reporting and accounting practices in the Nordic region.

    Conclusion

    The main challenges that remain in this field are the lack of structured business document data and high-value datasets like financial statements, particularly affecting cross-border interoperability due to the absence of a common baseline in the Nordics. Agencies and private sector actors need to promote interoperability across semantic, technical, administrative and legal aspects, with each country enhancing its capabilities based on its strengths. It has been proved in the NSG&B work that it is possible to develop a semantic model that will make it easier to share the different levels of data cross-border.
    Progress is being made as the vision from the original application scenario is gradually realised through efforts by private and public sectors. While implementation varies by country and administrative culture, the focus remains on advancing semantic and technical interoperability. This allows countries to maintain their standards while improving business operations in the Nordic region. However, going forward, it is important to note that data sharing and interoperability across borders are not a one-off task, but rather more of a continuous work to keep up with development.
    Table 3: Overview of the deliverables from the NSG&B working group on Open Accounting & Simplified Reporting: purpose & result, impact and next step.
    Deliverable
    Purpose & result
    Impact for businesses
    Next step/​future work
    1) Interoperability challenges of financial statements - a common Nordic vocabulary/​semantic model
    Semantical model mapping file
    Semantical model API specifications
    Advance interoperability of financial data
    Lessened need for the mapping of individual actors
    Common API specification to access business registry data
    Continue mapping of financial information
    Take the work to XBRL community
    2) Interoperability challenges in the VAT reporting area
    Reverse charge VAT end report
    Mitigate reporting burden for SMEs
    Better services from agencies in the future
    Communicate the results and take national actions according to the report
    3) Challenge of differing degrees of digitalisation of reporting
    SA-B synthesis report
    Understand what is needed in the future
    Better services from agencies in the future
    Disseminate the information in the agencies

    Perspectives for continued cooperation

    The key challenges include differences in the semantics of financial information, inconsistent application of standards and restricted access to vital registry data. Varying semantics reduce information quality and increase manual labour, necessitating ongoing semantic work for seamless data translation across standards. Inconsistent national standards hinder data interoperability, complicating business operations and data quality. Moreover, limited access to registry data makes assessing trading partners difficult. To address these issues, Nordic agencies must align on common data structures and make registry data more accessible, considering EU developments like digital wallets and high-value datasets directives. Based on the above highlighted challenges, the suggestions for further development addressing the above challenges are as follows:

    Continue the mapping of national registries’ data

    Agencies should continue to map relevant data elements from the registry data, which are of interest to the ecosystem actors, and then bring the identified data elements forward into the semantic work, which can make them interoperable in terms of content. It is important to determine for all datasets whether the data is fully structured and freely available.

    Helping stakeholders comply with new reporting requirements and continue national development

    VAT in the Digital Age (ViDA) exemplifies progress by standardising digital reporting and eInvoicing for real-time VAT data on intra-community transactions, and it allows states to impose eInvoicing without prior tax authority authorisation. With increased sustainability reporting demands due to the CSRD, cooperation between Nordic authorities is crucial to manage the growing complexity and data requirements.
    National development should continue to facilitate the use of accounting information and simplify reporting, focusing on interoperability and legislative cooperation, including EU-level influence. Once necessary interoperability elements are established, the Nordic region can advance real-time accounting data sharing through channels like digital wallets, supported by digital business identities.

    Continue semantic work and participate in mapping with XBRL-Europe

    Agencies should continue semantic work, participate in XBRL Europe mapping, and expand the Finnish RTE project’s Accounting and Audit Vocabulary experiment to include more data elements. This collaboration will enhance semantic skills, improve interconnected services for Nordic businesses and address the technical interoperability challenges.
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