At the start of 2020, preparations to report your financials in the Inline XBRL format to comply with the European Single Electronic Format or ESEF mandate must have been the topmost agenda for your accounts and finance team.
Trying to understand what the ESEF mandate means for you while being on the lookout for a software or service provider to help you with the compliance might have given you sleepless nights back then.
Fast forward to December 2020, and you seem all set to do your ESEF filing. But you now have the choice to wait it out one full year for the mandatory filing. Read on to know why you should go ahead with your filing despite the postponement.
But first, here’s a bit of context…
ESEF mandate postponement
News that the ESEF mandate would be pushed back has been around since October. On December 11, 2020, the European Parliament and European Council decided to bring in an amendment to the Transparency Directive that would allow EU member states to delay ESEF requirements for their listed companies by one year.
So far, the UK, France, Poland, Finland ,and Denmark have opted for a delay in making ESEF requirements mandatory for their listed companies, while some more EU member states may soon follow suit. However, companies are free to choose if they want to voluntarily file their 2020 reports in the iXBRL format. As per the earlier ESEF timetable, it was mandatory for EU-listed companies to submit their 2020 AFRs in the Inline XBRL format. But now the mandatory requirement has been moved to the 2021 AFRs.
Want to sit out this year?
Let’s blame it on the jitters of a first-time filing if you don’t feel prepared to do your ESEF filing this year. But here’s the truth about filing reports in the XBRL format — the difficulty exists only for one or two filings. Subsequent filings are both easier on your pocket and consume less time because you would have understood tasks around the XBRL side of your report.
2 reasons to go ahead with your ESEF filing despite the postponement
Your XBRL report is valuable
Preparing reports using the XBRL format need not be about compliance with a mandate. The open data standard brings accuracy and transparency to your reports — not to mention machine-readability — that makes it easier for analysts, investors, and other stakeholders to understand your financial position.
If you go ahead with your ESEF filing this year despite the choice to wait, you will gain the reputation of being a proactive and transparent company. And your digital report will start getting used by various stakeholders.
You’ve come this far. Don’t stop
Secondly, you have come this far. You have gone through the process of selecting the software or service that’s helping you prepare the iXBRL report. You have learned how the machine-readable layer of your report is prepared. So, why not go for a test filing with your regulator to see how your report is accepted? A practice round will make your task easier when the mandatory filing comes along in 2021.