The ESEF filing season is now in full swing and financial calendars are awash with dates for freezing the financials, proofreading the statements, and running them by the company Board. There are a few extraordinary items to be taken care of at this stage. This blog attempts to bring to light some of the minor yet crucial aspects that might jeopardize your filings or at least lead to unnecessary delays.
Check Numerical Accuracy Of Financial Statements
Companies should look into the arithmetical accuracy of their financial statements. Any inconsistencies in the numbers will result in an error called ‘Inconsistent duplicates’ – which is serious enough to block an ESEF XBRL filing.
For instance, an ‘Inconsistent duplicate’ error will occur if the value tagged ‘ifrs-full_ProfitLossBeforeTax’ is different in the Profit & Loss Statement from that in the Cash Flow Statement. The key is to spot such errors well in advance using the appropriate tools to get ESEF XBRL documents ready faster.
Remove External Links From The ESEF xHTML
While getting their ESEF XBRL annual reports stylized or designed – which is a critical and time-consuming task – companies need to ensure there is no external link anywhere in the document leading to a source outside the annual report. The presence of external links will be a violation of ESEF XBRL guidelines and result in validation errors.
Check For Validations At The Regulator Portal
Software tools used to process ESEF XBRL documents will have certain validations inbuilt. However, validation tools installed with the regulator’s portal may be different. In such cases, companies need to check whether the regulator’s validations require them to make changes in their iXBRL documents.
For example, the regulator’s portal may throw up the validation warning ‘Value Positive’ for the XBRL element (ifrs-full_OtherReserves). This warning means that for the given element the value needs to be positive only and negative values are not acceptable. Elements might even need an extension in such cases.
Know Your Regulator’s Package Specifications
Although ESMA has mentioned a set of guidelines regarding .zip packages, each EU country’s Officially Appointed Mechanism (OAM) can create its own specific requirements. Companies need to know the .zip package requirements of their country’s OAM so that their ESEF XBRL packages do not get rejected.
Get An Auditor’s Opinion On Your ESEF Document
Only a few European countries have mandated an auditor’s opinion on ESEF documents. However, it is advisable the companies have their ESEF documents audited. It would help them get their XBRL tags and document structure approved at an early stage before the more complex stages such as getting the ESEF XBRL annual report designed.
Using 2021 ESEF Taxonomy Version Isn’t Mandatory
The recently-released 2021 ESEF Taxonomy has now been given a green signal by the EU Parliament. Companies may voluntarily use the latest taxonomy version for their 2021 annual reports. However, companies should take note that using the 2021 taxonomy version while preparing the 2022 annual reports is mandatory. In other words, ESEF XBRL submissions in 2023 should use the 2021 taxonomy version. Companies need to remember that the EU Parliament has allowed them to use the 2020 taxonomy for this year’s filings so that the current filing season is hassle-free.
Ensure Timely Internal & External Authorizations
Since ESEF XBRL submissions are a milestone in themselves – being a new filing requirement – it is important for companies to plan out the various authorizations internally and externally so that there is no delay in the final ESEF publication.
We hope the points we have mentioned above help you with your ESEF readiness and ensure a swift and hassle-free filing.
