Progress bar
Insight

European Single Electronic Format - What you need to know

Insight 30 July 2020

European Single Electronic Format - What you need to know

The European Single Electronic Format (ESEF) Regulation requires annual financial reports of publicly listed issuers to be made available in XHTML format, with a further requirement for IFRS consolidated accounts to have iXBRL tags. This requirement does not change the content of annual reports, it only addresses the format in which they are published.

The European Single Electronic Format (ESEF) Regulation requires annual financial reports of publicly listed issuers to be made available in XHTML format, with a further requirement for IFRS consolidated accounts to have iXBRL tags. This requirement does not change the content of annual reports, it only addresses the format in which they are published.

ESEF only applies to annual reports. It does not cover interim accounts.

Background

The ESEF Regulation can be traced back to the 2013 EU Transparency Directive (TD), which amended the previous TD and sets out transparency requirements for issuers whose securities are listed on EU regulated markets. More specifically, Article 4(7) of the 2013 TD introduced the requirement for all Annual Financial Reports to be prepared using a single electronic format for financial years beginning on or after 1 January 2020. ESMA was tasked with the responsibility of drafting Regulatory Technical Standards (RTS) to specify the electronic reporting format.

The ESEF Regulation that came into force in 2019 was the outcome of such review.

The ESEF has two key requirements:

  • All Annual Financial Reports to be prepared using XHTML format; and
  • IFRS consolidated financial statements to be marked up using iXBRL tags within the XHTML. As a result, sections of the financial statements will be “machine readable”, further easing the analysis of accounts by investors.

IFRS consolidated financial statements

Individual financial statements

Primary financial statements

Mandatory for period beginning

1 January 2020

Voluntary (if Member State provides taxonomy)

Block tagging of notes

Mandatory for period beginning

1 January 2022

Detailed tagging of notes

Voluntary

The FCA is responsible for implementing the requirement in the UK and has added DTR 4.1.14 to the Handbook as follows:

“Reporting format

The annual financial report must be prepared using the single electronic reporting format specified in Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format as amended from time to time.”

Additionally, the FCA is currently consulting to delay the initial ESEF reporting by a year. The consultation will run until 28 August 2020.

Statutory auditors of companies with securities listed on EU regulated markets will have to provide an audit opinion stating:

  • whether the financial statements included in the annual financial reports give a true and fair view in accordance with the relevant financial reporting framework; and
  • whether these financial statements comply with the requirements set out in the ESEF Regulation.

The Committee of European Auditing Oversight Bodies has issued guidelines on how audits of ESEF compliance should be carried out. However, such guidance is subject to national transposition in each Member State.

Definitions

eXtensible Hypertext Mark-up Language

eXtensible Business Reporting Language

Inline eXtensible Business Reporting Language, which is a format that enables XBRL data to be embedded directly into an HTML/XHTML format document

How can Sanne help

We believe automation of financial analysis adds considerable value for investors and that this trend is likely to extend to financial reporting by other issuers, including those investing in alternative asset classes. Sanne is currently exploring options available to have a solution tested and ready well ahead of the 2020 year-end reporting period.

Sanne can provide the full range of fund services to comply with the obligations under the law. Our team of Private Debt & Capital Markets experts spans a global office network. We take an active role in industry consultations and disseminating our knowledge into the market. We take pride in our ability to deliver the solutions required by our clients to support their alternative investment structures, in an ever-evolving industry.

If you have any queries regarding any of the above or if you require any further information, please get in touch with our people.

Let's talk...

Services
Background image
Paul Séjournant Associate Director, Product Development - United Kingdom
Card link - Go to a specific page
Swiper Scrollbar

Appendix 1 – Useful links

Related Articles

Image
Insight 13 March 2020
Economic Substance, corporate tax residence and the implications of Coronavirus (COVID –19)
Card link - Go to a specific page
Image
Insight 8 April 2020
Accounting and financial reporting implications around COVID-19
Card link - Go to a specific page
Image
Insight 13 August 2020
EU Anti-Tax Avoidance Directive 1 in Luxembourg - Where are we now
Card link - Go to a specific page