Starting in January 2020, all public listed companies are required to prepare their Annual Financial Reports (ARFs) — for financial years that start on or after January 1, 2020 — in inline XBRL (“IXBRL”) format.  The data in iXBRL will be machine-readable, bringing EU’s public listed companies into the digital space. Issuers, who have been filing in the simpler PDF format, have much to consider as they begin their iXBRL compliance journey. esef

ESEF ESMA Mandate

Understand the ESEF Mandate

As outlined in our introductory blog, ‘What is the ESMA Mandate all about?’ the Inline XBRL (iXBRL) reporting standard will apply to all public companies in the EU.

The switch to iXBRL will allow issuers to move from the unstructured data of PDFs to the structured data of iXBRL. Structured data will make it easier for the ESMA to review financials, and for  investors and analysts to compare the performance and position of multiple companies.

Which companies are affected by the ESEF iXBRL mandate?

The iXBRL mandate will affect all the public listed companies in the European Union, approximately 5300 companies.

When is this mandate commencing?

This mandate comes into effect on January 1, 2020, for all Annual Financial Reports (AFRs) for financial years that start on or after January 1, 2020.  The first AFRs in iXBRL format will be filed in early 2021.

Scope of the mandate

  • Primary Financial Statements: 2020 –  The scope of iXBRL reporting in the 1st year is limited to Primary Financial Statements only (statement of financial position, statement of profit or loss and other comprehensive income, statement of changes in equity, and the statement of cash flows). This means companies with a December 31st 2020 year-end will need to report all numbers in these four Financial Statements in iXBRL format in 2021.
  • Block tagging of notes: 2022 – The scope of iXBRL reporting expands to tagging the content of Notes to Accounts as blocks of text from year 3 onwards. This means companies with a December 31st 2020 year-end will need to report the text in the Notes to Accounts in iXBRL in 2023.
  • Detailed tagging of notes: Tagging of numbers within the notes is voluntary.

The difference between XBRL and Inline XBRL

XBRL, based on XML, is machine-readable only while inline XBRL, based on HTML, is both machine-readable and human-readable.

Explore Your Options

The ESEF iXBRL reporting needs careful planning. Your compliance teams must start planning as early as possible as it involves critical activities that have an impact on your company’s ability to file in time and share results with investors and other stakeholders.

Here are 2 important factors to keep in mind that will help you decide on the right approach for the ESEF mandate.

Narrow Your Choices

Some questions you may need to consider before approaching the mandate:

  1. Are you already using or familiar with any iXBRL solution?
  2. Are you able/willing to invest time and resources in building iXBRL capabilities? How much time can you set aside?
  3. How important is control of your iXBRL for you?

A Few important Things to Watch Out For

  1. Approach to tagging: Tagging is a process where the information reported in a financial report is mapped or linked with the most appropriate element in the taxonomy. 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 style and design aspects of your AFR.
  2. Completeness of tagging: The ESEF taxonomy has 4662 elements. Watch out for completeness of tagging based on the phase of the mandate.
  3. ESEF specific requirements: Ensure the solution you select can handle extensions and anchoring, and can create company-specific taxonomies.
  4. Multi-language support: The ESMA taxonomy has multiple language labels. Check to see if the solution you are considering supports multiple languages.

Test run the iXBRL process with your current year AFR

Don’t wait until your 2020 report is ready. See if you can create an iXBRL output with your 2019 annual report. This will not only give you a clear sense of what is involved, the effort won’t be wasted – you can reuse the same tags on your 2020 annual report next year.

Want to see what your annual report will look like in iXBRL?

We will be glad to create an iXBRL document for you, using your 2019 annual report

  • At no cost and with no obligation – so that you can view an iXBRL document using your company’s data, and so that you can judge the quality of our tagging.

IRIS is the most trusted name in XBRL implementation and reporting, and since 2005 has provided solutions for more than 26 regulators and 1.5 million filers across the globe.  Preparation of Inline XBRL documents is easy with IRIS CARBON®, our cloud based, collaborative, single source disclosure management solution.  For more information, or to schedule a consultation, send us an email at info@iriscarbon.com.

esef ESMA Mandate