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ESEF Filings – In-house or Outsource?

ESEF is ESMA’s effort to improve the analysis and comparability of financial statements that are submitted by companies through regulatory reporting. In a bid to make information more accessible for investors, businesses, and auditors, ESMA introduced the mandate of using iXBRL as the format. This is different from the current PDF ‘glossy’ in the sense that it is both machine and human-readable and requires a specific iXBRL tagging or conversion technology.

The aspect of tagging is not easy and needs a deep understanding of the financial report as well as the taxonomy. You can decide to tag the ESEF report yourself in-house or outsource the process to a third-party iXBRL specialist like DataTracks. Either way, you need to have a good understanding of the ESEF rules and guidance provided by ESMA to ensure your ESEF report is fully compliant.

The process does not end with tagging. Once done, the report will also need to be validated and analyzed to ensure that it follows the ESEF specifications and reporting manual. Reliable software that allows for remote, collaborative working and facilitates successful submissions is also important.

When searching for the right solution to help you with your ESEF needs, you will most likely have to decide between acquiring and implementing an iXBRL tagging technology in-house or outsourcing the process to a third-party iXBRL tagging provider who will offer you a managed services bundle like DataTracks.

Choosing the right option for you will depend on your business’s needs in terms of budget, resources, and existing processes.

In-house Solution

If considering an in-house solution, there are many factors to be taken into account:

– Do you have the expertise in-house to accurately tag and convert an ESEF compliant report?

– Do you have the capacity to add this into your annual report production timetable?

– Do you have the agility to adapt your tagging with the ever-evolving mandates and rules of the regulators?

– Can you account for extension tags for ESEF that require anchoring to be done?

– Will you also be able to align your report with your design needs for publication?

– Can you handle manual intervention with taxonomy knowledge if your software’s auto-tagging feature does not tag custom elements?

Managed Service Providers

When considering the specific issues that an in-house solution can throw up, outsourcing this critical but mundane task of compliance may be the best. So what should you keep in mind while choosing the right service provider?

– Do they fit into your annual report process? Considering that there are deadlines to publish your ESEF reports, a provider should be able to deliver accurate compliant reports without causing delays to your publication timeline.

– How experienced are they in iXBRL? Check for the duration of their existence in the market, how many other companies they help, and for their advice on first-time ESEF submissions.

– Ensure that you can rely on them for reviewing and tagging support. The ESEF taxonomy has over 7,000 tags to choose from so you will need a partner who can take you through your options, particularly when it comes to the use of the extension tags and when they can be used.

– What more can they offer apart from tagging? Support for last-minute changes, dedicated software, etc. are all bonus points that will help you in making your decision.

To summarize’ if filing ESEF for the first time, don’t underestimate the level of knowledge and preparation it will take to ensure a smooth filing. Irrespective of whether you choose to build an in-house solution or partner with an expert, it is important to decide and start now.

For more information about the ESEF mandate, and how DataTracks can help ensure a seamless filing process, click here.

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