On 3 June 2019, the European Commission put forward new rules to support the digitalisation of corporate reporting and to achieve greater transparency of the yearly information disclosed by companies listed in the EU capital markets.
The new European Single Electronic Format (ESEF) proposed will make companies’ financial records more readable and accessible. Under the new rules, from January 2020 all listed companies will need to finalise their annual financial reports using up-to-date digitalised business reporting systems (XHTML and iXBRL) which improve accessibility, and make the information much more user-friendly. The move will also facilitate the availability of key financial information in all EU official languages.
XHMTL (eXtensible HyperText Markup Language) can be opened with standard web browsers and can be prepared and displayed depending on the preferences of an individual issuer. Where the annual financial report contains IFRS consolidated financial statements, these shall be labelled with XBRL tags. XBRL (eXtensible Business Reporting Language) is a freely available and global framework for exchanging business information. XBRL tags make the labelled disclosures structured and machine-readable. This facilitates software supported analysis and comparison of different reports, granting investors a key tool to support their investment decisions.
Furthermore, as XBRL taxonomies can contain labels in several languages, users can compare numerical information in the financial statements across issuers even though the issuers prepare their financial statements in different languages. In addition to that, for individual users of financial data, the machine-readable XBRL information is easily transformable to other formats such as SQL or Excel, avoiding onerous manual rekeying.
In support of these new rules, the European Securities and Markets Authority (ESMA) has prepared an ESEF Reporting Manual and ESEF taxonomy files to help companies in their preparation. The new provisions will be updated on a yearly basis to reflect possible updates to the International Financial Reporting Standards (IFRS) taxonomy, which aims to improve communication between preparers and users of financial statements. More information is available here.
Sources: here and www.IASPlus.com
The article is part of dReport – June 2019, Accounting news.