Guide to choose a right solution model for your ESEF and ESG
Since 1st January 2020, issuers on EU-regulated markets must prepare their Annual Financial Statements (AFS) in the European Single Electronic Format (ESEF) according to the iXBRL taxonomy. The objective of the ESEF roll-out was to make financial reporting easier for issuers in the EU and improve accessibility, comparability, and analysis of annual financial reports. According to the European Securities and Markets Authority (ESMA), iXBRL or Inline XBRL is the most suited technology to achieve this objective. Most commonly, there are three different solutions to ESEF and ESG reporting.
How to choose the best solution to ESEF reporting for your company?
Read on to find the different types of solutions and their benefits.
3 Different Solutions to ESEF Reporting
There are three ways of mapping and converting your financial statements in iXBRL format. You can handle the mapping and conversion of your financial reports yourself through access to the software, have a service provider handle everything related to the mapping and conversion of your financial reports, or you can handle ESEF reporting in collaboration with the service provider. Let’s find out more about these solutions.
1. Handle All the Processes Yourself – With an In-House Team
The first way to handle your ESEF reporting is by hiring an in-house team and performing the mapping and conversion activities yourself. For this solution to ESEF reporting, you need access to software and a set of tools that enables you to prepare ESEF reports. The primary advantage of this solution is the complete control that the business gets in filing their AFS. You and your team will be the only ones deciding how the conversion will take place.
However, hiring an in-house team also means you will be entirely responsible for filing compliant reports without errors. Moreover, hiring experts or training them will cost you more time and money, deviating your focus from the business’s core activities.
2. Have an ESEF Service Provider Handle Everything
In this solution, you can let a solution provider handle everything related to the ESEF reporting requirements of your company. One obvious advantage of this solution is that the burden of ESEF reporting gets off your shoulders and requires minimal effort (choosing a trusted vendor).
However, one disadvantage to this approach is the lack of control. Everything is in the service provider’s control, and you must trust them for a fully compliant ESEF report.
3. Collaboration With an ESEF Service Provider for ESEF Conversion
Some service providers offer to handle ESEF mapping and conversion in collaboration with your company. The solution offers a certain level of control as you can tell the provider how you want the conversion to be carried out. An expert ESEF professional will get the job done without you having to concern yourself with the time and effort of engaging in the technical aspects of the process.
The Next Step
So to answer the question of choosing the best of the three ESEF reporting solutions: it depends on your company’s requirements. While for companies with vast resources, hiring an in-house team can be beneficial, other companies may greatly benefit from outsourcing ESEF requirements to a trusted vendor.
A service provider like DataTracks, with 17+ years of experience, can help you file error-free, compliant ESEF reports with ESMA. So what are you waiting for? Contact a DataTracks expert @ +31202253702 or email at email@example.com to know more about their services.