Electronic Reporting
The European Single Electronic Format (ESEF) is the electronic reporting format in which issuers whose securities are admitted to trading on EU regulated markets must prepare their annual financial reports to facilitate accessibility, analysis and comparability of annual financial reports. ESMA develops the regulatory technical standards (RTS) which specify this electronic reporting format as well as guidance and implementing tools.
ESEF scope
In 2013 the Transparency Directive (Directive 2004/109/EC), which sets rules on harmonisation of transparency requirements of issuers, was amended to include, amongst others, a requirement for issuers to prepare their annual financial reports (AFRs) in a single electronic reporting format (ESEF).
ESMA was assigned the responsibility to develop regulatory technical standards (RTS) to specify this electronic reporting format. The detailed provisions of the ESEF and the underlying policy choices are contained in the original Final Report on the RTS on ESEF. ESMA yearly amends the RTS on ESEF to incorporate the necessary updates on the ESEF taxonomy and developments in the market.
The RTS on ESEF applies to all issuers subject to the requirements contained in the Transparency Directive to issue public AFRs.
ESEF requirements
The ESEF requires that:
- All AFRs are prepared in XHTML (eXtensible HyperText Markup Language), which is human readable and can be opened with standard web browsers;
- Where AFRs contain IFRS consolidated financial statements, these are marked-up with the labels or tags contained in the ESEF taxonomy using Inline XBRL (eXtensible Business Reporting Language), which make the labelled disclosures structured and machine-readable;
- The XBRL ‘tags’ are embedded in the XHTML document using the Inline XBRL technology, which allows the benefits of XBRL tagged data to be combined with the human readable presentation of AFRs;
- Primary financial statements (income statement, balance sheet, statement of cash flows and statement of changes in equity) are marked up in detail; the Notes instead will, as of 1 January 2022, need to be marked up by applying mark-ups to larger pieces of information (block tagging) such as explanatory notes and accounting policies. A block tag may include text, numeric values, tables and other data.
ESEF taxonomy
A taxonomy provides the hierarchical structure used to classify financial information and is essential for structured electronic reporting using XBRL. The taxonomy to be used for ESEF is an extension of the IFRS Taxonomy. The human-readable labels of the core ESEF taxonomy, listing and defining the specific elements that issuers can use to identify (‘tag’ or ‘mark-up’) the information disclosed within IFRS consolidated financial statements, are included in Annex VI of the RTS on ESEF.
Issuers shall mark-up disclosures using the latest ESEF taxonomy and selecting the taxonomy element having the closest accounting meaning to the marked-up disclosure; if the closest taxonomy element misrepresents the accounting meaning of the disclosure, issuers shall create a so-called extension taxonomy element and anchor such extension to the core taxonomy element that has the closest accounting meaning.
The IFRS Foundation updates on a yearly basis the IFRS Taxonomy to reflect the issuance of new or amended IFRSs, the analysis of disclosures commonly reported in practice, or improvements to the general content or technology of the IFRS Taxonomy. Accordingly, ESMA publishes on a yearly basis a Final Report amending the RTS on ESEF to incorporate the necessary amendments on the ESEF taxonomy to be aligned with the IFRS Taxonomy.
ESEF implementing tools
ESEF Reporting Manual
The content of the ESEF reporting manual is aimed at issuers who are required to prepare annual financial reports in ESEF format and software firms developing software used for the preparation of annual financial reports in Inline XBRL.
Since 2019, ESMA annually updates the ESEF reporting manual to provide guidance on common issues that might be encountered when creating ESEF documents and explains how to address and resolve them.
The purpose of the document is to promote a harmonised and consistent approach for the preparation of annual financial reports in the format specified in the RTS on ESEF.
ESEF XBRL Taxonomy files
The schema of the core ESEF taxonomy is included in Annex VI of the RTS on ESEF which contains the human-readable labels to mark-up the information disclosed within the IFRS consolidated financial statements.
The ESEF XBRL taxonomy files are a set of electronic files providing a structured representation of the elements that substantively constitute the core taxonomy. These XBRL taxonomy files, compliant with all relevant technical and legal requirements, are published on ESMA’s website in the form of a taxonomy package prepared in accordance with the XBRL Taxonomy Packages 1.0 specification to provide guidance to issuers in creating their own entity-specific taxonomy. The package includes labels in all EU languages.
ESMA annually updates the XBRL taxonomy files to reflect the requirements contained in the last update of the RTS on ESEF as well as the update on the ESEF reporting manual.
ESEF Conformance suite
The ESEF Conformance Suite is aimed primarily at a technical audience (i.e. XBRL software developers) as a way to test and provide assurance on whether software tools are able to create and / or consume filings which are in line with all ESEF requirements. In particular, the Conformance Suite permits to determine if a software is able to detect and flag infringements to the ESEF requirements contained in a filing.
The Conformance Suite builds on the rules and guidance set out by the ESEF Regulation and the ESEF Reporting Manual. It consists of 214 packages grouped into 71 tests, packaged in a zip file. It is accompanied by an Excel file which describes the rules and guidelines and the test cases, together with the expected error codes in case of incompliance. For each identified rule and guideline there is at least one valid and one invalid test case.
ESEF Educational material
To help a common understanding of the ESEF framework, ESMA has produced a series of video tutorials summarising the key requirements of the ESEF regulation and explaining basic features for its implementation:
- First video tutorial: An introduction to the RTS on ESEF
Follow tutorial 1 with the script.
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- Second video tutorial: Implementation support for preparers: how to prepare an Inline XBRL report
Follow tutorial 2 with the script.
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- Third video tutorial: Further implementation support for preparers and FAQs on ESEF.
Follow tutorial 3 with the script.
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ESEF and sustainability reporting
Reflecting the political agreement on the Corporate Sustainability Reporting Directive (CSRD), as from 1 January 2024, undertakings will be required to follow the ESEF by preparing their management reports in the XHTML format and marking-up sustainability information, including the disclosures required by Article 8 of the Regulation 2020/852 (Taxonomy Regulation) using the Inline XBRL technology.
To this end, a taxonomy for the European Sustainability Reporting Standards (ESRS) will be developed to allow for the reported information to be tagged in accordance with those standards.