In recent months there’s been a little uncertainty around ESMA’s latest mandate ESEF, which has only been exacerbated by Brexit. And many have started asking if ESEF is actually still happening.
The answer is: Yes, ESEF is still on!
The Brexit delay until January 2020 means that companies falling within the scope of ESEF will still need to comply.
So, from 1 January 2020, all EEA-listed companies who currently report under IFRS will have to prepare and publish their Annual Financial Reports (AFRs) or “glossy” accounts in a new digital format called iXBRL, in addition to or instead of PDF.
If you’re new to ESEF and you think you might be affected, you can find out more about it in our blog post here.
But how can you actually prepare for ESEF?
To implement ESEF, you’ll generally have two main options: to either acquire and deploy an iXBRL tagging technology in-house or to outsource the process to a third party iXBRL provider.
While selecting a solution really depends on your individual business needs in terms of budget, resources and existing processes, there are 3 key factors you should consider when making your choice:
- How able/willing are you to invest time and resources in building iXBRL capabilities in-house? – The ESEF mandate will only require you to prepare and submit your accounts in iXBRL once a year, so you should really consider if you have enough resources and time to build and maintain iXBRL capabilities in-house. Deploying and maintaining technology is usually associated with higher costs as it requires a lot of time and resources for adoption, training and knowledge retention.
- How can you ensure the accuracy of your ESEF data? – iXBRL tagging products and solutions are prone to manual or technical reporting errors and data mismatch. So, you should make sure your chosen solution provides a guarantee for the accuracy of your iXBRL data as ultimately, you’re the one accountable for your ESEF filing.
- Is your ESEF solution future-proofed? – The regulatory environment and requirements are constantly changing so you should make sure your ESEF tagging solution is future-proofed and can easily address any future mandate changes.
The real challenge
Looking back at the HMRC’s iXBRL adoption in 2009, many organisations first jumped on the self-tagging bandwagon and opted to prepare their iXBRL reports in-house. But, in reality at the time of reporting, the vast majority ended up outsourcing the process after realising the actual cost of iXBRL compliance in terms of deployment, training, maintenance and production.
In addition, there’s still a debate about the issues of iXBRL/xHTML formatting. The iXBRL formatting is very limited in terms of design and visual representation, so many people have been worried if it’ll be possible to get a PDF-like xHTML/iXBRL document at a reasonable price.
Forget about the fuss
With our past experience of implementing other XBRL-related mandates (e.g. the HMRC and Revenue’s annual reporting mandates) and the latest technology, we were able to effectively articulate the real-world complexities and challenges of ESEF and come up with the most convenient, simple and cost-effective ESEF compliance solution.
The Arkk ESEF solution allows you to continue focusing on your core business by taking out all the hassle and risk. With a quick turnaround in under 24 hours, ability to process InDesign files and a 100% tagging guarantee from our expert UK-based tagging team, we’ve got you covered so you can easily forget all the fuss about your ESEF tagging obligations.
Go beyond ESEF and maintain best practice
The FRC has recently released a small taxonomy that covers the new Streamlined Energy & Carbon Reporting (SECR) legislation. The FRC is keen for this information to be tagged and comparable across the market, despite the SECR mandate not being mandated yet.
We at Arkk also believe that given the importance of the “glossies”, it would be in-line with best practice to do so. We have therefore extended our ESEF offering to include the SECR mandate at no additional cost.
If you’d like to learn more about our ESEF solution, please get in touch.