In a bizarre reversal of the government’s digital-by-default policy, Companies House has been receiving company accounts as data but turning them into poor-quality photocopies before releasing them to the general public on its website.
The UK registrar, celebrated as a pioneer of electronic company accounts, has been sticking photographs of company accounts on its website since the 1990s. The British tradition was that companies filed on paper. The registrar adapted to the internet age not by getting electronic documents but by taking photographs of the paper ones. Members of the public were able to get company information if they were willing to copy it out by hand.
The Condem coalition government changed all that in 2011 when it started making companies file their tax returns as data. But while Companies House has since got two-thirds of company accounts as data as well, it has still been sticking the photocopies up on its website.
The bizarre thing is companies don’t send paper documents to Companies House when they file their accounts electronically. Yet the registrar has still been sticking photographs of paper documents up on the public register. It got 1.4m company accounts electronically last year.
Yet the British public still only got poor-quality photocopies of paper documents when they went to the public companies registry.
Most incredible still, companies have been filing their accounts with the registrar in a data format (called iXBRL – short for ‘inline eXtensible Business Reporting Language’) – that displays automatically in anyone’s web browser as an electronic document. Finance and computer experts can harvest the data with specialist software. But it would appear to most people as a common ‘html’ web page that looks identical to a paper set of accounts. Yet when a member of the public goes to Companies House to search for a company’s accounts, they still get a paper photocopy.
The registrar has been generating scanned copies of other company documents it doesn’t get on paper as well. It got 6.8m company filings as electronic documents in all last year, including mortgage documents and annual returns of directors and shareholders. Yet it still put them on its website as photocopied images, which it has been storing as photo pdfs.
It has meanwhile been promising to cut the £60m cost of its old, paper operation since 2003, when it first started planning to make companies file their accounts electronically. But it carried kept on a staff of about a thousand people to process all the paper instead.
Gail Cobley, practice director of accounting and tax experts Blue Dot Consulting confirmed that accounts she had sent to Companies House electronically for her clients were being displayed as paper photocopies on the registrar’s website.
“That’s bizarre because we do it all through software,” she said. “So Companies House are photocopying it. It seems like a waste of time.”
Dr Paul Booth, who retired this week as technical manager for the Institute of Chartered Accountants in England and Wales (ICAEW), confirmed by querying the public register himself that Companies House was publishing photocopy images of documents it received electronically. But the situation left him baffled.
“I can’t see any purpose to creating an image file when you’ve already got the html,” said Booth.
I can’t think of any advantage in having the pdf,” he said, referring to the pdf files that Companies House uses to contain the photocopies it put on its website.
“It looks like one of those useless pdfs that is indistinguishable from an image. If it’s iXBRL, you’ve already got something that will display. You don’t need to put it through another process. If you file in iXBRL then that’s it.”
John Turner, chief executive officer of XBRL International, the standards body responsible for overseeing the format in which companies file their electronic accounts, said he was aware Companies House had been publishing XBRL company reports as “paper under glass”, his derogatory phrase for public records published as images of paper documents.
Yet he defended Companies House, which among all financial institutions and businesses around the world received his association’s award for innovation in iXBRL and open data last year.
“I’m sure there’s a very good reason for it. It is in the interests of the public that the information is available,” he said.
Turner insisted people could still get the electronic filings through bulk downloads of Companies House data, though he conceded, “that’s not something that someone on the street would typically do”. Companies House downloads deliver thousands of iXBRL files every day to people with the computer resources and skills to handle them. Some companies had begun building copies of the Companies House registry from that data. Turner said members of the public should go to them instead of Companies House.
Chris Taggart, chief executive of Open Corporates, one of the companies that has been republishing Companies House data, said the old system by which companies sent their filings to the registrar on paper was “ridiculous”.
“Filings are normally created electronically, stored as data, printed out, sent to Companies House as pieces of paper. Companies House then scan it. And in order to use that as data you have to get someone to re-key all that.
“Often, the credit reference agencies will send it to Sri Lanka or to the Philippines to get it re-keyed. That is what is happening at the moment. And it’s data in the first place. We think this is just ludicrous,” said Taggart.
Companies House images were even of such poor quality that they couldn’t be re-scanned and put through Optical Character Recognition software to turn its images into text, he said.
He defended the registrar, however, for turning electronic documents into scanned images. It might have other priorities and may not have wanted to change its existing workflow, he said. Open Corporates has been publishing the iXBRL versions itself.
Olive Brown, an iXBRL expert with accountants PWC, said Companies House had to turn electronic company filings into paper photocopies because the business information industry had grown accustomed to gleaning its data from them.
Columbia University academics said in 2012 business data aggregators like Bloomberg and Thomson Reuters had been using “labor-intensive” input processes prone to error. Yet they had snubbed iXBRL because they trusted their own data more, and not all companies were yet filing with registrars electronically. They also perceived iXBRL as a threat. Regulators and registrars around the world such as the US Securities and Exchanges Commission nevertheless stuck with iXBRL as a universal way of describing business information. Business aggregators use data languages defined for their own advantage rather then the common good.
Tom Davin, senior vice president & managing director of the Software & Information Industry Association’s Financial Information Services Division, said the large data aggregators had not wanted to collaborate on a data standard.
“My general observation is the big aggregators like Bloomberg and Thomson Reuters are so competitive they are wary of doing anything together, unless their customers are forcing them into it,” he said.
Computer Weekly spent two weeks asking Companies House to explain its photocopies without getting a straight answer. The registrar finally refused. Its website has since been down.
Companies House said in a written statement it received 60 per cent of company accounts electronically and 40 per cent on paper.
“We intend to make accounts data available within the next two months subject to priority issue where it has been filed with us as data,” it said.
A Companies House spokesman refused to say how it had turned those electronic filings into paper photocopies as well.
“The formats we present are the formats customers like to see them in. Our customers like to see it in these formats. So we produce it in these formats,” he said.
“Data is one of those things not available on the Companies House Service. But it is one thing we intend to put on. We launched a new beta service and the data isn’t available on that.
“What you are raising is not considered a high-priority issue. People are not crying out for this material to be changed so it’s not high on our agenda,” said the spokesman.
Companies House employed 854 staff to handle the collection, conversion, validation and publication of company documents last year at a cost of £61m. It cut 311 staff since 2010, and cut by 80 per cent the number of company filings it received on paper.