The European Single Electronic Format (ESEF) mandate requires that all Annual Financial Reports (AFRs) for financial years that start on or after January 1, 2020, be prepared in inline XBRL (“iXBRL”) format. Even though we won’t see the first AFRs filed in iXBRL until 2021, now is the time to prepare for the transition from the PDF format to iXBRL format. esma of ixbrl
Compliance teams should determine how the mandate will affect them, and examine their current reporting processes to understand what adjustments may need to be made. Most importantly, because the iXBRL format is more complex than the PDF format, companies should seek out and establish a relationship with a trusted software partner.
Here are ten factors to consider when seeking the right software partner for your company:
1. XBRL Partner Credentials
Research the background and credentials of the desired reporting solution or service provider. How many years of experience do they have? How many XBRL professionals are on their team? What is their depth of knowledge of IFRS reporting? Do they work with other regulatory agencies around the world, and how many iXBRL filings have they done?
2. Customer References
Ask for client references, and reach out to their current clients.
3. iXBRL Knowledge & Training
Look for a partner that can answer all of your questions about iXBRL and best filing practices, and that offers thorough training sessions for your compliance team. Make sure the training covers aspects of iXBRL reporting that are unique to the ESMA ESEF iXBRL mandate as well – the creation of company-specific taxonomies, extensions and anchoring, and more.
4. Trial-run Access
Check whether it would be possible to do a trial run of iXBRL using your latest published annual report
5. Tagging Approach
Ensure that tagging of elements is done on the face of the document and not using an excel tool or template. If you are presented with an excel template, beware — it is not iXBRL. Excel tools cannot handle the style and design aspects of your AFR.
6. Turn Around Time (TAT)
If you are considering an outsourced option, check if the turn-around time for converting documents to iXBRL is not more than 10-15 days.
7. Flexi Models
Are services offered if required, apart from the software? Does the service/platform have the flexibility to switch from an outsourced model to an in-house model if needed in the future? Also, do you have the ability to leverage the software to streamline your AFR reporting process by using a disclosure management module of the same software?
8. Support Levels
A new regulation needs careful attention and implementation. Make sure the solution provider provides you with adequate and timely support. Check if the service provider works in your timezone, and ask for the modes of contacting support — email, phone, or online chat. Make sure you are well covered when you are in need of help.
Check if you can leverage your iXBRL document for more than just ESMA compliance. If the solution provides you with an iXBRL reader that you can use on your website, investors and analysts tracking your company will see a smart and interactive version of your Annual Financial Report.
Ensure the solution provider is abreast of technical know-how with regards to the ESEF ESMA mandate, especially the ability to quickly update the solution when ESEF taxonomy or validation rules change.
As they say, well begun is half done.
So, get started by choosing the right platform without any further ado, and save yourself from a world of worry later.