The dry run: How to plan your ESEF iXBRL process

Every company’s annual report has a story behind it. An accountant might regale how he noticed an error in the numbers at the right moment and a CFO will tell you how his team stepped up to make some last-minute changes that could have cost his company a precious deadline. Each story reflects planning, crisis management and a palpable relief at either having anticipated an issue or solving it despite not seeing it coming, all of which, in a company’s context form a unique narrative.

When an ESEF iXBRL report is prepared for the first time, like any other activity, there are hits and misses. We’ve witnessed stories of organizations who choose to do their iXBRL process by themselves in their first year and continue on the same path the following year, while some decide to outsource their process in the first year and if they feel confident enough, move the process in-house. Having a dry-run is important to determine these decisions and in our experience, every good iXBRL story has one.

What is a dry run?

A dry run is basically the process of preparing your first ESEF iXBRL report ahead of the formal mandate. Since your ESEF iXBRL filing starts from 2021, you can perform a dry run in 2020 to develop your iXBRL strategy, using your 2019 report as your starting point.

It is understandable if you feel reluctant, since the process and efforts involved in a dry run is unchartered territory, and you may have many ‘live’ priorities to deal with already. But a dry run is more than just a confidence-boosting activity. You will create your Company Taxonomy, select appropriate tags, create extensions where needed – all of which will be largely the same as what you will have to do next year. For most companies, line items in their financial reports repeat to a very large extent each year – and this ready taxonomy can be used to tag your document next year. Small edits or changes that may need to be made (such as adding a new element or removing an element), will take much less time next year and will save you a lot of stress when you are in the midst of your live process next year.

The dry run will also help you take stock of your iXBRL solution’s capabilities and you can make a more informed decision on whether you would like to handle your first live filing yourself, or whether you would like to outsource your ESEF iXBRL report creation to experts next year.

Transparency in data reporting

What does a dry run entail?

Using your 2019 report, a dry run involves:

1) Converting the report (or a part of it) into xHTML:

So you understand the nuances of what an xHTML report looks like.

2) Tag selection for your primary financial statements:

Using the ESMA-ESEF taxonomy, and creation of extensions and anchoring as required.

3) The actual creation of the taxonomy / the iXBRL technicalities:

You will understand the process of applying tags in your document using a software solution like IRIS CARBON®. The technical aspects also entail the creation of the Company Taxonomy including adding extensions, anchoring these extensions to the base taxonomy, creating linkbases, assigning right labels, validation checks, etc.

If you work with experts for your dry run, your time involvement could be as little as 2 -3 days, but you will be assured tremendous peace of mind and a great deal of confidence as you transition smoothly into the new iXBRL format for your first live ESEF filing. Nevertheless, now is the best time to straighten out the chinks in your armour. If you want to learn more about how a dry run process works, you can get in touch with us. IRIS CARBON® experts are just a click away.

We hope to be able to support you with your XBRL/iXBRL and other compliance filings, in any way you want. So if you’re looking for an efficient and sustainable solution to streamline the last mile of your reporting process or an ESEF iXBRL solution that will ease your compliance process, we’re here to help.

The dry run: How to plan your ESEF iXBRL process

The dry run: How to plan your ESEF iXBRL process

The dry run: How to plan your ESEF iXBRL process

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