As ESMA introduces the new iXBRL requirements for Annual Financial Reports, we’ve got a quick-fire guide on the ESEF taxonomies.
What is ESEF?
ESMA’s latest requirements will impact all EEA listed companies when preparing their Annual Financial Reports. These are currently detailed, text-heavy documents usually presented in PDF format. From 2021, firms will need to submit their annual reports with year ends on or after 01 January 2020 in xHTML (an iXBRL tagged web page) using the European Single Electronic Format (ESEF) taxonomy in order to be compliant with the EU Transparency Directive.
Standardising these reports will make financial data far easier to analyse and compare between firms, both for issuers and shareholders.
Who is in scope?
All publicly listed companies in the EEA who currently prepare IFRS consolidated accounts are in scope for the new requirements.
What are the reporting standards?
The new ESEF taxonomy will closely resemble IFRS, with a few additions from ESMA to accommodate language variances and guidance around filing rules. Until January 2022, only the primary financial statements will require iXBRL tagging. After this, the ESEF taxonomy will also apply to notes in the form of block-tagging.
The labels used for tagging should be in the same language as the annual financial report, and these labels will be provided within the taxonomy for all the official EU languages. For Norway and Iceland, it’s expected that the national regulator will provide the translation for the labels, whereas Lichtenstein will be using German, which is an official EU language.
When is the first filing deadline?
The new requirements will kick in for financial years beginning on and after 1st Jan 2020, with the first reporting deadlines introduced in 2021. Whilst not yet confirmed, we expect that national regulators will provide options for voluntary filings ahead of this for firms who want to complete a dry-run.
What the changes mean
Whilst not mandatory, ESMA anticipate that the new requirements will result in firms creating a more streamlined view of their annual financial reports. This transition towards improving data quality is a trend we’re seeing more of as financial reporting becomes increasingly digital and easier to analyse.
You can find out more about the ESEF requirements via ESMA’s website. And remember to check the Arkk blog next week, where we’ll be bringing you the latest on ESEF from our Regulatory Manager, Sabina.