When it comes to choosing a solution for ESEF, companies have two options. You will either acquire and implement an iXBRL tagging technology in-house or you will outsource the process to a third-party iXBRL tagging provider. Choosing between these options will depend on a business’s individual needs in terms of budget, resources, and existing processes.
When looking at an in-house solution, there are many factors to be considered. 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? We know that ESEF tagging is not straightforward, even for those with experience in tagging for Revenue/HMRC. The rules and guidance are different, and they can change on a regular basis. We have the addition of extension tags for ESEF; it requires calculations to be added and the use of members.
Many in-house solutions or software providers have the capability to tag the report as it is being produced. This is certainty a benefit as it means the work can be completed without the time pressure of your publication date looming. But you will have to consider how the tagged output from the software will merge with your InDesign annual report for publication.
A feature seen as a pro for in-house tagging is the idea of auto-tagging, the argument being that it can make the ESEF process easier and will help to alleviate the need to learn the taxonomy and guidance. Auto-tagging can provide a partial solution to ESEF but there are some specific nuances that will still require human input.
As previously mentioned, the requirement of extension and anchoring tags, means that human input for these is a must. There is more to these than just creating a label for a tag, the relationship with the anchor(s) tags must accurately reflect the line item in the report. Something else to consider is that in addition to data in the primary financial statements, ESEF also requires numbers in related footnotes to be tagged. That is likely to be another issue for auto-tagging as a) it will need to find the numbers in the text and then b) it’ll need to find out what they relate to. In the situation where those numbers would be extended/anchored, that will be practically impossible.
Even in a world where auto-tagging works perfectly, the tagging in an ESEF document needs to be 100% accurate. Therefore, companies would still need a human (an experienced one, who has an extensive knowledge of the ESEF taxonomy and the ESMA rules and guidance) to review the output before they put it on their website for the world to see.
Then we look at the service providers. When choosing the right service provider, you will have to take into account how they will fit into your annual report process. The ESEF publication is time restricted, and you must find the provider that will meet your needs without adding unwarranted additional work to your publication timeline.
Another thing to consider is what their experience is in the world of iXBRL? With many companies having completed an ESEF test run or voluntary submission this year, has this service provider had any experience with this and what would be their advice to those companies going through the ESEF process for the first time?
When relying on a third party to complete the tagging of your report you will need support when it comes to the reviewing of the tagging. The ESEF taxonomy has over 7,000 tags to choose from so you will need a team that can take your through your options, particularly when it comes to the use of the extension tags. You will need a partner that knows the taxonomy in a high level of detail, what the 7,000+ tags in the taxonomy are and when they should be used.
Something else to question is what support you will receive outside of the tagging? Will the team be on hand to assist with submission hiccups? Are they in your time zone? You need to ensure you are covered when you need assistance.
At ARKK we believe that your ESEF compliant report needs to be tagged by experts who understand the taxonomy and the ESMA and local Officially Appointed Mechanism (OAM) rules. We have designed a process that will have minimal impact on your year-end publication timetable with a standard turnaround of 24 hours to convert your final PDF into an ESEF compliant report, with quicker turnarounds available of as low as 4 hours. We have over 12 years’ experience in iXBRL tagging and apply over 1 million tags annually, meaning we have the knowledge and experience capable of handling the complexity of ESEF reports. Our support does not stop with the tagging of the report. We are there every step of the way to help ensure you receive a successful submission to your regional OAM.
As members of XBRL UK and partners of AMANA, ARKK have tagged over 200 ESEF compliant reports to date and that figure continues to grow so we are on hand to give advice on best practices given our experience to date. If you would like further information on our ESEF product, please visit our ESEF page.