ESMA updates on ESEF XBRL taxonomy- facilitating the implementation of the ESEF regulation
In December 2019, the European Securities and Markets Authority (ESMA) introduced a new version of the European Single Electronic Format (ESEF) taxonomy to facilitate stipulated reporting of the annual financial reports. The mandate issued by ESMA states that from January 1st, 2020, onwards, all public companies in the European Union (EU) need to prepare their annual reports in XHTML format. Further, when the annual report includes consolidated financial statements prepared in IFRS, companies should tag those financial statements with XBRL tagging and generate Inline XBRL (or iXBRL).
Why is iXBRL better?
iXBRL is a digital reporting standard that is a machine and human-readable.
The ESEF requires all financial reports to be prepared in XHTML, which retains the layout, style, formatting, and presentation of the annual report. This makes it very easy for people to read and understand, and can be opened on any web browser too. Further, when XBRL tags are embedded, the output becomes structured and machine-readable. It is ultimately supporting the main objective of ESMA, which is to assist issuers as well as investors. Reporting will be made easy for issuers, and software-based analysis and comparison of different reports will give investors a better insight to make investment-related decisions.
ESMA has gone a step further in its shift towards digitalization by updating the taxonomy in all the EU languages. This allows a comparison of numbers across issuers even when the financial statement is in different languages and styles. This taxonomy can be accessed on ESMA’s website in the form of a Schema and supporting files, which includes entry points in all EU languages. All files within the package are also available at their canonical locations. The ESEF taxonomy is an extension of the International Financial Reporting Standards (IFRS) taxonomy, which is issued by the IFRS Foundation. Companies have the option of custom elements if the ESEF taxonomy does not include the appropriate element they are looking for. However, the custom element has to be anchored to the available ESEF element as per the ESMA’s Anchoring guidelines.
Errors in filing the statements in the proper way could lead to major consequences and should be avoided at all costs. Using a professional company like DataTracks, who have an experience of preparing over 75,000 iXBRL filings with HMRC and over 20,000 XBRL reports with the SEC, would be a good decision. To implement ESEF reporting in your company using iXBRL or to get further clarity on the subject, you can connect with a regulatory reporting expert like DataTracks at email@example.com or you can give us a call on +31 (0) 20 2253 702.
DataTracks, Singapore, is a global leader in disclosure management software. DataTracks serves 17,000 business enterprises in 24 countries. DataTracks software and services have been used to prepare more than 180,000 compliance reports so far for filing with regulators such as SEC in the United States, ESMA, EBA and EIOPA in European Union, HMRC in the United Kingdom, ACRA in Singapore, SSM in Malaysia, CIPC in South Africa and MCA in India.