What is ESEF/XBRL? What are the key requirements, report sections and deadlines?
In the age of digitalisation, securities regulators and tax authorities are increasingly using the machine-readable XBRL file format to give financial data a clear structure and to digitally process, review and compare it. XBRL also allows investors to analyse financial data from different companies at the touch of a button. XBRL is already the standard in 70 countries. As of 2020, the European Securities and Markets Authority (ESMA) requires all listed companies in Europe that apply IFRS to publish machine-readable financial reports in a new, XBRL-based electronic reporting format, the European Single Electronic Format (ESEF). For now, this applies to important accounting elements such as the balance sheet, income statement and cash flow statement (primary tables) in the IFRS consolidated financial statements.
The tagging of these report sections follows the clearly defined classification schema of the IFRS taxonomy. Taxonomy extensions are used for company-specific items that are not available in the IFRS taxonomy.
In addition to elements tagged in accordance with the ESEF (primary tables from 2020 and notes from 2022), the consolidated notes and the management report must also be submitted in XHTML format starting from 2020. The XBRL information is embedded in the XHTML document, so the language used is also known as Inline XBRL (iXBRL). ESEF reports can be displayed using any web browser, while the embedded XBRL is machine-readable (and can be processed automatically).
Complex technical standards mean companies can expect to see significant implementation costs when the new format specifications are first applied.
All exchange-listed companies in the EU must produce their reports in XHTML format. The change affects financial years beginning on or after 1 January 2020. This means that IFRS consolidated financial statements must be reported in iXBRL format from 2020 onward. Initially, primary financial statements (balance sheet, income statement, cash flow statement, statement of changes in equity) and certain text disclosures must be tagged with basic information such as company names, registered office, legal form etc. and issued in ESEF format.
The contents of notes will be added to this list on 1 January 2022, but they will only need to be assigned to a taxonomy element block by block (per note).