InfoBytes: Q&A with Anuradha Radhakrishnan on ESEF Compliance Reporting
Full Disclosure, recently had a chat with Anuradha (or Anu as she is known), Product Head, IRIS CARBON®, about ESEF Compliance Reporting and how companies should prepare for the ESMA Mandate in the EU. Anu comes with extensive experience, having worked with both XBRL domain and technology and having led IRIS CARBON® to a successful launch across five countries.
You conducted several workshops on the new ESEF iXBRL mandate in Europe. What was the reaction of issuers?
Anu: Most issuers had heard that there was a new regulation coming, but they were not well-versed with the specifics of the ESEF iXBRL mandate. In the workshops, I walked issuers not just through the mandate and its requirements; I also showed issuers a sample of their own Annual Financial Report (AFR) in iXBRL format through our ESEF solution, IRIS CARBON®. I think seeing their own annual reports in iXBRL format made it clearer for them, and the attendees were able to get a better feel for a topic that was not very clear to them earlier.
What do you think companies can do ahead of the ESEF mandate to get more comfortable with this new reporting format?
Anu: Some companies have already converted their current year annual reports into iXBRL format. This has helped them in many ways. One, it has taken away the fear or unfamiliarity of iXBRL, since they can see what this format looks like. Two, it has given them a much better feel for the steps and the time involved in the process of creating an iXBRL document – and allowed them to determine which parts of the process they want to keep in house and which parts they want to outsource. Three, since annual reports for most companies have largely the same line items each year, the tags that are selected for the current year report can be reused when it comes to applying them on the live 2020 annual report.
We would recommend this to all companies. Converting their current year annual report into iXBRL is definitely a good starting point, and it can be done to suit their schedules, since there is no mandate deadline to meet currently.
To get their reports converted, we recommend that issuers explore solutions that offer them tools and services both. In the course of working with the tool or with experts, issuers can get trained on the XBRL tagging, on iXBRL review and on the software tool as well – and make up their minds on which approach would suit them best for their 2020 iXBRL annual report creation.
Without such training or a trial run, it is likely to be more difficult for issuers to settle on an approach that would work best for them in the live filing situation.
What is your suggestion to issuers on choosing a solution or service provider?
Anu: Issuers have multiple options to choose from, in order to comply with the mandate. They can choose to outsource the iXBRL creation process if they already have too many things on their plate, or they can handle it in-house if they have the inclination to learn iXBRL. Some companies are looking to integrate the AFR preparation process with iXBRL as well.
My advice to issuers would be: pick a solution and service that gives them the flexibility to adjust their options later. A lot of companies prefer to lean on XBRL experts when a mandate is new, but they don’t necessarily want to be dependent on experts forever. The reverse also happens – some companies want to handle their iXBRL compliance internally right from the start, but also want the ability to reach out for expert help should they need.
An ideal solution or service is one that gives issuers the ability to start out wherever they are most comfortable, and the flexibility to adjust the offering as they get more familiar with the process. Issuers should make sure the pricing is defined upfront for all options, so there are no surprises later.
I would also say that when looking at solutions and service providers, issuers should find out what training is offered as part of the package. Both on the mandate, as well as on iXBRL, and the tagging and review process.
One last thing I would like to add, the ESEF reporting requirement also provides an opportunity for issuers to look for solutions that streamline their overall compliance reporting process, beyond just ESEF reporting. This is especially true for issuers that use Word and Excel files to prepare and finalize their reports – and where they are faced with all the classic problems that arise on account of not having a centralized, collaborative document creation and management platform. So companies could also look for solutions or services that help them not just with ESEF compliance reporting, but also with streamlining their overall disclosure management process. Of course, this last one is not ESEF specific, just something that issuers may wish to explore while they are reviewing tools and services.
What are the top three things issuers should watch out for in connection with the ESEF iXBRL mandate?
Anu: I would say the top three things revolve around the differences between XBRL and iXBRL:
First, not many issuers are fully aware of the differences between XBRL and iXBRL. XBRL as a format is machine readable and based on XML, while iXBRL is machine readable and human readable both, and based on HTML. So that is the most important message to convey.
Second, there are more XBRL tools available in the market than there are iXBRL. iXBRL tools focus on the layout and design aspects of the original AFR, apart from the ability to embed XBRL tags into the report, while XBRL tools don’t need to focus on formatting. So, while evaluating solutions, issuers should check to see if it handles the design and style aspects of the AFR as well apart from the tagging aspects
Third, excel-based tools or template-based tools exist in the market which promises to hide the complexity of XBRL tagging. While these work well for XBRL, they do not work well for iXBRL, because excel and templates cannot handle the unique design and style aspects of AFRs. So these kinds of tools are not recommended.
Summing it up, Anu stresses that EU markets should not fret over ESEF mandate and iXBRL implementation. As there are no mandate deadlines to be met currently, the issuers can explore their implementation options through collaborating with SaaS providers like IRIS. Having an experience of more than 14 years in the XBRL space, we possess the expertise to hand held issuers and walk you through understanding what the ESEF iXBRL mandate is all about. This also includes giving you precise training in assisting you to create reports in iXBRL. Our meticulously planned workshop is bound to get the ball rolling when it comes to embracing the ESEF Compliance Reporting and help you gain confidence in creating standard reports in iXBRL format. Hence I would say to issuers looking for solutions to streamline their overall compliance and reporting process is to get in touch with us and get high-quality standardized reports through our document creation and management platform.