Top 3 Tips for ESEF Reporting
The European Single Electronic Format (ESEF) was enacted on 1 January 2020. ESMA (The European Securities and Markets Authority), EU’s securities regulator, requires issuers on EU-regulated markets to prepare their annual financial reports in this electronic reporting format. ESEF is ESMA’s effort to improve the analysis of companies’ financial statements and make the information more readily available to businesses and auditors on a single platform in the same format. It is an iXBRL format, an electronically tagged XHTML file requiring a specific iXBRL tagging or conversion technology. Tips for ESEF reporting can help you ensure error-free reports in compliance with the requirements laid down by ESMA.
ESEF is the future of reporting for EU-regulated markets to improve the data quality and accessibility in financial reporting. It aims to bring financial reporting into the digital age. There are also other benefits of preparing your financial statements in iXBRL, including:-
- Higher quality of data
- Lower filing and preparation costs
- More structured data
But before preparing your financial reports in ESEF, here are some recommendations to consider.
Tips for ESEF Reporting to File Complaint Reports With ESMA
Have a Thorough Understanding of ESEF Rules
Understanding the rules of ESEF is critical to preparing reports that are compliant with ESMA’s requirements. Whether you prepare your financial statements with an in-house team or outsource to a third-party iXBRL expert, knowing the ESEF rules and the tags applied to the report can help you smoothly carry out the complete process. If you consider filing your financial reports in-house, having reliable software is the first step towards compliance.
Understand the Root Cause of Errors in ESEF Preparation
If you are an EU-regulated listed company, while preparing reports in ESEF, remember that you must produce your company’s annual report in XHTML and tag the financial statements with iXBRL tags. While most companies lookout for issues arising from iXBRL tagging and rules, they often ignore the problems in financial reporting that stem from converting PDF files to XHTML.
Start Your ESEF Preparations Early
The taxonomy used for ESEF financial reporting is based on IFRS taxonomy which is prepared and updated annually to provide issuers a hierarchical structure to classify the financial information in their reports. As an issuer, you must keep up-to-date with these taxonomies, guidelines, and rules. Detecting possible issues at an early stage can help issuers rectify the errors and ensure reports comply with ESMA’s requirements. Starting your preparations early gives sufficient time to review the tagging and the final report before submission. Moreover, it also allows auditors enough time to review the tagged output.
Way Towards Error-Free Financial reporting? Outsource!
Companies preparing their financial reports following ESEF can either prepare them in-house or outsource to an ESEF expert. If you prepare them in-house, these tips for ESEF reporting can come in handy. But outsourcing is your best bet if you want to streamline your filing process and submit error-free reports with ESMA.
The future of financial reporting is digital, and machine-readable reports are the way forward. With an ESEF partner like DataTracks, you can ensure quality, reliability, and flexibility of your financial reports. Providing XBRL certified solutions, DataTracks has experience of 200,000 successful reports in 26 countries for more than 16 years. By constantly updating their software, DataTracks comply with every regulation laid out by ESMA and provide front-runner XBRL software solutions and service.