Are you ready for iXBRL and ESEF? 

29 November 2018

Milena Paunova

Milena Paunova

Consultant

The mandated introduction of the European Single Electronic Format (ESEF) by the European Securities and Markets Authority (ESMA) under the Transparency Directive is going to affect all European listed companies. This blog provides key details of the requirement and explores how you can stay compliant and ease the pain of how you produce your reporting.
 

The ESEF fact sheet 

  • When: 1st January 2020 
  • Who: over 5,300 companies need to comply 
  • What: IFRS taxonomy 
  • How: creation of financial statements in iXBRL format 


What is iXBRL? 

iXBRL stands for inline Extensive Business Reporting Language and it is also referred to as “barcodes for reporting”. The format comprises of human-readable, structured and machine-readable data. 

iXBRL is used by companies around the world to prepare financial statements in a specific format which enables them to be compliant with national specific regulations and analysts’ requirements. The format provides structured data which allows preparers to retain full control over the layout and presentation of their report. 

The inline XBRL specification defines how XBRL metadata can be embedded within well-formed HTML or XHTML documents, so that data and associated rendering information can be incorporated within a single document. 

 

Which other countries already work with iXBRL? 

Currently iXBRL is required format in the following countries: Denmark, United Kingdom, Japan, USA and South Africa. 
 

How can you prepare for iXBRL? 

iXBRL makes reporting more accurate and more efficient. It allows unique tags to be associated with reported facts. 

To be able to prepare iXBRL report you need 3 main components: 
  1. Financial Statements 
  2. Taxonomy (standard or customer specific) - ESEF standard IFRS taxonomy is required 
  3. Software or a solution which enables you to tag your data. 


Preparation of your annual financial reports and beyond with SAP Disclosure Management (SAP DM) 

SAP DM is a solution which is used for a wide-range of business cases. It works with any data source (SAP, non-SAP), has dedicated add-ons for Microsoft Office and enables comprehensive audit trails.

It also enables custom workflow process for approval, rejection and status of the reports with custom authorisation rights and eliminates those very common rounding errors which are a big paint point. 

iXBRL preparation for ESEF is part of SAP Disclosure Management’s roadmap for 2019. 

SAP DM has been working with companies for a long time to support them with iXBRL and XBRL preparation and an ESEF iXBRL add-on would be another feature included in the list of SAP DM capabilities. 

Your financial statements data would be fully integrated with the tagging process for iXBRL. Due to the roll forward feature SAP DM has, in year 2 of iXBRL preparation, your accounts would already be automatically tagged (1st iteration) but you would have your current financial year on display. 

The full list of use cases for SAP DM are as follows: 
  • Front half of the annual report – strategic and management reports and KPIs 
  • Back half of the annual report – primary financial statements, notes to the accounts 
  • Compliance with mandatory requirements – iXBRL (incl. ESEF) and XBRL
  • Management reports 
  • Quarterly, monthly and half year reporting 
  • E-Billanz – German specific taxonomies and filing 
  • Solvency II, COREP, FINREP.


Fig 1. Use cases for SAP Disclosure Management.
 


Which European companies have conducted field tests for iXBRL annual financial statements? 

Twenty-two companies across Europe took part in the ESEF initiative to prepare and test financial statements in the new iXBRL format. A series of iXBRL reports were created as field tests. These companies were from the following countries: Germany, Poland, Italy, Greece, Belgium, Finland, Czech Republic, Estonia, France, Spain, Austria. 

For a full list of participating companies click here


Conclusion 

If the mandatory ESEF requirement affects your company, it is time to consider your path to compliance with the new regulation. The clock is ticking, however there is still time to make strategic decisions on how you implement this directive. We have plenty of experience helping organisations to transform their existing reporting. Our recommendation would be to evaluate in detail ESEF requirement and plan how it would fit with the rest of your ongoing projects and transformation programmes. 

Do not hesitate to get in touch so that we can assist with your new journey. 
 

About the author

Milena Paunova

Consultant

Bluefin and SAP S/4HANA - welcome to the one horse race