After a successful first half to 2021, with over 100 files tagged and submissions successfully filed in six jurisdictions across the EEA, ARKK has had plenty of first-hand experience with ESEF validation and submission rules.
The ESMA reporting manual and the Conformance Suites included with the ESEF taxonomy contain a lot of validations that can either be classified as ‘Warnings’ or ‘Errors’. There is a big difference between the two types of validations, but many preparers mistakenly group them together as the same thing. Validation warnings are common and can often be ignored. Validation errors, however, are more serious and need to be addressed.
- A ‘Warning’ can and should be interpreted as "Please have another look and make sure this is what you want to report". A report can be perfectly valid but can have several warnings.
- An ‘Error’, on the other hand, will cause the ESEF filing to be invalid, and the specific Officially Appointed Mechanism should not accept them.
The most common example of validation warnings involves the tagging of ‘mandatory’ text tags. Despite the word ‘mandatory’, this information only needs to be tagged if it is present in the report. One of the mandatory mark-ups is called ‘Explanation of change in name of reporting entity or other means of identification from end of preceding reporting period’. Of course, if there has been no change in name for the reporting entity, this information will not be present in the annual report, and so it does not need to be tagged. This will cause a validation warning. This is a good example of a validation warning that can be ignored.
XBRL Europe has published a document discussing other warnings and their recommendations on how validation warnings should be treated.
The tagged ESEF filings that our clients have voluntarily submitted this year are all perfectly valid and technically correct, with various financial standard organisations already confirming this in a review of the FCA’s submitted files.