What is ESEF Reporting
ESEF stands for European Single Electronic Format. It is a format of reporting annual financial statements that will be enforced by the European Stocks and Markets Agency (ESMA).
According to European Transparency Directive (ETD) this format will be mandatory to use for all Annual Financial Reports beginning 1st of January 2020.
The RTS on ESEF will apply to all issuers subject to the requirements contained in the Transparency Directive to make public AFRs.
What are the requirements of ESEF Reporting
The ESEF requires that:
- All AFRs shall be prepared in XHTML, which is human readable and can be opened with any standard web browsers;
- In addition, companies preparing their consolidated AFRs under IFRS (or an equivalent GAAP) will need to include iXBRL tagging using the IASBâ€™s taxonomy
- The XBRL â€˜tagsâ€™ shall be embedded in the XHTML document using the Inline XBRL technology, which allows the benefits of XBRL tagged data to be combined with the human readable presentation of AFRs;
Who should submit annual reports in ESEF
Any company listed on a regulated UK or European exchange with securities (includes both shares and bonds), regardless of whether their registered office is in the EU or in a third country, will be required to conform to ESEF and file its annual financial report (AFR) in xHTML. Additionally, if the entity prepares IFRS consolidated financial statements then it is required to tag the primary financial statements in accordance with the IFRS taxonomy using iXBRL format.
Currently, the ESEF impacts only the main-market-listed companies and does not cover the alternative- investment-markets (AIM) listed companies.
What is the scope of iXBRL tagging
In its first year, the mandate for iXBRL tagging of financial statements is limited to primary statements namely income statement, balance sheet, statement of cash flows and statement of changes in equity and shall be marked up in detail. So, in 2021, a company has to submit these four financial statements in iXBRL format.
From the following year, the scope of tagging expands including Notes to Accounts. Notes will need to be marked up by applying mark-ups for whole sections of the notes (block tagging).The tagging of numbers within the Notes is voluntary.
What should be submitted for ESEF Reporting
Listed companies now have to fine balance the art of preparing their annual reports to effectively communicate important performance information to all stakeholders while at the same time complying with the new regulation requirements. As it always happens, there is no one-size-fits-all answer and each listed corporate need to look internally the resources available and decide their best option
The online ESEF pack filed through the OAM will need to consist of the following attachments:
- Annual Financial Report in XHTML;
- Statutory financial statements of the legal entity in iXBRL (using right taxonomy);
What are available ESEF Reporting Solutions
Companies have multiple options to consider when it comes to preparing their ESEF reports. The best option will depend on the resources available in house.
- If you have in-house expertise then you can install a customized software package which incorporates the appropriate taxonomy and allows tagging of data elements against the taxonomy.
- If you prefer an expertâ€™s help then you could consider outsourcing ESEF report production altogether to experts like FinTags.
We receive your existing annual financial report in formats such as Word or PDF format and send you ESEF package with experts-tagged iXBRL files after quality check and successful test filing with ESMA.