Does compliance with the ESEF mandate mean that you must compromise on how your annual report in the xHTML format looks in comparison to the highly attractive PDF document that you have been presenting all these years? Not in the least bit.
We have been closely monitoring the early ESEF filings this year, and it is shocking to see that in a few cases the xHTML versions of annual reports reflect none of the style elements of their well-designed PDF counterparts.
Over the past many years, companies have been publishing annual reports that are highly stylized and aesthetically pleasing. That is because annual reports serve two functions. They are both legal documents for regulatory compliance purposes and a document that investors and analysts use to track companies’ financials and strategies. The appearance of a document counts when it is to be used by investors and analysts.
While helping companies prepare documents that comply with the ESEF mandate, some ESEF software has not been able to effectively retain the stylized elements of a PDF annual report within an xHTML document.
Here’s an example that shows how strikingly different both versions look.
The following is the PDF version of a company’s annual report. You can see that the graphs are attractively designed and placed.
Screenshot of a company’s PDF annual report
In the xHTML version of the same company’s annual report, however, the graphs look like they have been stretched horizontally. You can also see some extra graphs and text introduced.
xHTML version of the same company’s annual report
xHTML reports with design elements missing run into problems on two fronts.
Auditors’ dilemma about signing off on documents without the usual design elements
It is the duty of an auditor to provide an opinion about an annual report. In countries such as Germany, where ESEF filings need to be audited, it becomes hard for auditors to provide an opinion when the xHTML file looks nowhere like the stylized PDF file. What do the auditors sign off on? Is it on a bad-looking xHTML document or an attractive PDF?
An unattractive xHTML can put off investors and analysts
When an annual report is not as presentable as expected, it may not garner the attention from investors and analysts that the company desires. The whole idea behind using the xHTML or iXBRL format is to increase the accessibility and comparability of annual reports. An xHTML report that lacks stylized elements defeats that purpose.
While running into glitches during first time ESEF filings is only to be expected, issues stemming from a software’s incapability to effectively introduce style elements into an xHTML document could be avoided.
It is important that while doing their ESEF filings, firms expect a lot more from their ESEF software than a mere capability for XBRL tagging.